Narrative
Full Description
Project narrative
On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Record ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and administered by AfDB. On May 19, 2022, AGTF signed a $40 million loan agreement (ID#101901) with the Government of Rwanda for the Transmission System Reinforcement and Last Mile Connectivity (TSRLMC) Project. On the same day, the African Development Bank (AfDB) issued a JYP 17.261 billion ($141 million) loan to the Government of Rwanda for the same project. The borrowing terms of these loans are follows: a 25-year maturity, an 8-year grace period, an interest rate of SOFR plus a 1% margin, a 0.25% commitment fee, and a 0.25% upfront (management) fee. The AGTF loan entered into force on January 9, 2023. The first scheduled AGTF loan disbursement was on June 8, 2023. The TSRLMC Project is designed as part of the $670 million multi-door Rwanda Universal Energy Access program that is being co-financed by the World Bank Group (WBG), OPEC Fund for International Development (OFID), Saudi Fund for Development (SFD), Agence Française de Développement (AFD), and the European Investment Bank (EIB). The project involves the construction of over 1,000 km of medium voltage and 3,300 km of low voltage lines to boost last mile access. It also involves building 137 km of high voltage lines and six substations required to strengthen the grid. Other features of the project include the installation or upgrading of more than 1,200 distribution transformers and related infrastructure. The purpose of the project is to extend electricity access to productive users and households and rural areas within the country's southern region and reduce greenhouse gas emissions in Rwanda's energy sector. The project is expected to connect 77,470 households to the electricity network for the first time. It is also expected to connect 75 schools, eight health centers and 65 administration centers, while enabling the evacuation of 125MW of clean energy from hydropower plants. The grid access component of the project will target households in southern Rwanda, where connection rates are below 34%. The main cities targeted are Gisagara, Huye, Nyamagabe, Nyanza, Nyaruguru, and Ruhango. The project will also seek to strengthen the network in Nyarugenge city, Nyamata, Kigali Hub, and other zones across the country with increased electricity demand. The project consists of six components: The Last Mile Grid Access component involves the construction of a total of 595 km of MV and 1,620 km LV connections resulting into connection of 77,470 households. These activities are scheduled to take place in Gisagara, Huye, Nyamagabe, Nyaza, Nyaruguru and Ruhango. The Distribution Network Reinforcement component involves: (i) Upgrade of LV single and three phase lines countrywide; (ii) Upgrade and extension of different MV lines for improved supply and Upgrade of Karisimbi 6.6kV line to 30kV; (iii) Engineering design and installation of Low voltage underground cables & renovation of MV/LV cabins in Nyarugenge; and (iv) Upgrade of Nyamata 30/30kV switching substation and rehabilitation of distribution substations in Rubavu, Muhanga and secondary cities. The Transmission Lines and Associated Substations Component will support (i) 110kV Rwinkwavu-Kirehe (37.2km), Gabiro-Nyagatare-Rulindo (46.1km) and Gicumbi (1.5km),(ii) 110kV Rukarara-Huye-Gisagara (45.8km), and (iii) Bugesera Industrial Park to New Airport (18.5km). The following associated substation will be constructed: (i) Kihere new substation (110/30kV) and extension of Rwikwavu; (ii) Huye SS and extension of Rukarara and upgrade of Kibogora substation; (iii) Nyagatare SS and extension of Gabiro and Gicumbi substations; and (iv) Bugesera Industrial park substation (220/110kV &110/30kV) and Bugesera International Airport substations (2 transformers). The Engineering and Supervision Consultancy, Feasibility Study and Project Audit (Procurement Financial and Environmental) Component will be for undertaking detailed component design, project supervision and management works covering the three main areas of project activities, a feasibility study for a REG Control and Communication Center Building to support network operations and dispatching, and an environmental audit of the project. The Project Implementation Component will mainly cover cost for the operation of the project implementation unit (PIU). The ESMF and RAP Implementation Component will support implementation of construction environmental and social management plans (ESMF), and compensation for resettlement along the transmission lines routes. The project was originally scheduled to reach completion by December 31, 2027.
Staff comments
1. The AfDB project identification number is P-RW-FA0-009. 2. During negotiation with the Government of Rwanda for the AFDB and AGTF Loans, as the AFDB had transitioned from the using LIBOR to SOFR and TONA as reference rate, the Government of Rwanda requested that the currency of denomination for the AFDB sovereign loan to be Japanese Yen (JYP). Accordingly, the $141 million loan was converted to JYP 17.261 billion while the currency of denomination for the AGTF loan was left unchanged. 3. The margin of 1% is calculated by adding the Funding Cost Margin (unknown) to the Loan Margin (0.8%) and Maturity Premium (0.2%). 4. The loan agreement can be accessed in its entirety via https://www.dropbox.com/scl/fi/p3xgb1j722ifw1gaxm9fn/Rwanda-2022-AGTF-Loan-for-Transmission-System-Reinforcement-and-Last-Mile-Connectivity-Project.pdf?rlkey=qvafehj72r3z5dhi2a39z4taa&dl=0. 5. AidData has estimated the AGTF loan's all-in interest rate -- at the time it was issued -- by adding 1% to average SOFR in May 2022 (0.72%). 6. The AfDB's loan identification number for the AGTF loan is 5050300002001.