Politics

Wed,16Jan2019

Politics

Power: Miracle gas to generate hope

 

By processing methane from the ultra-deep waters of Lake Kivu, Rwanda ?may have found a revolutionary source of power for the future

 

In its race for economic progress, as it puts behind it the bitter memories of the 1994 genocide, Rwanda is building glitzy new offices in Kigali as international donors fund road projects across the country. But progress requires energy and energy requires a source. A novel answer to Rwanda’s energy needs has been found in the deep blue waters of Lake Kivu.

 

?Straddling an active volcanic fault system, Lake Kivu has a methane gas content of around 55bn cubic metres with an annual regeneration capacity of 100 MW, which is almost double Rwanda’s electrical peak load.?

 

Muhire Hodari, chief operating officer of the government’s Kibuye Power 1 (KP-1) pilot gas platform, is a humble young man with a big job. In a quiet voice he explains what might well be a key to his country’s development aspirations: “As a first in the world, we have now generated an initial 1.5 MW of electricity from methane gas exploitation. Our extraction technology works and we can now focus on increasing output.” The KP-1 project, managed by the infrastructure ministry, has become a showcase for the transformation of the ‘Land of a Thousand Hills’ and the wider region.

Hopes rise for renewed
economic integration

 

Shared resources could spark better
neighbourly relations. Read more. 

 

Rwanda’s future demand for power will grow and outstrip the current electricity peak load of 55 MW. Erik Fernstrom, energy specialist at the World Bank’s country office in Kigali, says: “There is a lot of suppressed and unserved demand. A realistic target is a peak load of at least 130 MW by 2015.”?

 

A new heavy-fuel-oil plant in Jabana will generate 20 MW to alleviate immediate shortages, while small hydro-electric power plants are also going up. Rukarara dam, built by Sri Lanka-based Ecopower, should start producing 9.5 MW next year, but the 27.5 MW Nyabarongo project, being built by India’s Bharat Heavy Electricals and Angelique International, will only be ready in 2012. A further planned dam at Rusumo could generate between 60-80 MW, to be split between Rwanda, Burundi and Tanzania.?

 

Fuel for the fire?

 

Experts see the methane as critical to serve Rwanda’s future energy needs, and the pilot project shows that Lake Kivu can both produce power and bring in the investors. Energy minister Albert Butare confirms that at least two firms have shown interest in harnessing it. ?

 

The Rwanda Energy Company (REC), a subsidiary of local holding company Rwanda Investment Group, is one of them. “We have set up a [separate] test plant on Lake Kivu to refine our extraction technology to not only produce electricity from the gas but to simultaneously produce fertilisers, diesel, kerosene and naphtha,” explained Ivan Twagirashema, REC’s chief operating officer.?

 

US-based Contour Global is also in contract negotiations with the government for the installation of four gas platforms that should eventually generate 100 MW. On the cards are a gas concession and a long-term power-purchasing agreement with Contour, whose CEO Joseph Brandt told The Africa Report of his firm’s plans to invest $75m to install capacity for 25 MW in the first two years, followed by 75 MW thereafter.?

 

Technical innovations?

 

Extracting methane from the lake poses tricky technical challenges but, with the help of Houston-based Antares, Contour has spent 18 months developing the design of the gas-gathering system. “We will have to extract the gas with sufficient pressure to separate the gas from the water,” said Brandt. “But we are both optimistic and humble… We are doing something novel.”?

 

Analysts say the gas reserves will do much to advance sustainable development in Rwanda and may also bring regional benefits. “The gas allows for the development of local industry, as the emergence of endeavours to bottle gas will lower the cost of fuel to the benefit of householders and small businesses,” says Estelle Levin, sustainability consultant at London-based Resource Consulting Services. ?

 

The government hopes the power generation will also help Rwanda to add value to primary exports. “The new energy source promises benefits to tea and coffee manufacturers and may open up major opportunities for value-addition in Rwanda’s mining sector, where the need for energy is great,” said environment and mines minister Vincent Karega. ?

 

The private sector is equally excited about the project. “The news that the pilot plant on Lake Kivu is successfully producing electricity is enormous,” says Bruce Stride, operations director at Kivu Resources, a company planning to build a tin smelter in Gisenyi and to use both the gas and the electricity generated from the gas to produce in excess of 2,500 tonnes per year of refined tin. Rwanda is developing its own tin mining sector, which produced 1,140 tonnes of tin ore in 2007, while tin output from neighbouring North Kivu Province of Democratic Republic of Congo has been estimated at 2,000 tonnes of ore per month. ?

 

A high concentration of dissolved gases in lakes constitutes a risk, as was demonstrated by the deadly carbon dioxide (CO2) outburst at Lake Nyos in Cameroon in 1986, which killed 1,800 people. Lake Kivu not only contains methane, but 250bn cubic metres of CO2. The KP-1 project’s Hodari says: “We have also found significant amounts of toxic hydrogen sulfide, which we currently pump back into the lake because we do not have the technology to use it for energy generation yet.” A report written for the European Community’s humanitarian office states: “Large-scale exploitation of the Lake Kivu gas, if carried out in the right way, would…by reducing the gas-saturation of the lake water…considerably enhance the safety of the region.”

Federal Business in Abuja

Gemma Ware

 

It is an unwritten law in Nigeria’s corporate world that all the major regions of the country must be represented on a company’s board. It is called ‘federal character’ and there is even a parastatal organisation for its management in Abuja called the Federal Character Commission.?

 

Federal character underlies the business dealings of such prominent figures as Ibrahim Babangida, Shehu Yar’Adua, Sani Abacha and the late Chief M.K.O. Abiola, who had all been business partners at one time or the other. Habib Bank, founded by Abiola and Shehu Yar’Adua, has been absorbed into one of the country’s most successful financial institutions, Bank PHB. Inter-ethnic representation in the formal (and informal) private sector seems to help glue the otherwise fractious country together more effectively than any debates held on the floor of the National Assembly.

 

Sometimes seen as the most federal of all Nigerians despite their defeat in former Biafra, Igbos readily adapt to life anywhere in Nigeria and have widespread property holdings in Abuja. They bought the land from their Hausa/Fulani business partners, who are often better connected when it comes to government allocations. Such financially advantageous relationships help explain how Nigeria has avoided any return to the Biafran war.

 

?No matter the challenges of nationhood, war is never an option. “We have intermarried and welded too much in business to engage in warfare like the one in Rwanda,” says Sam Emehelu, who publishes a golf journal. “In the course of my work, I have met the cream of Nigerian society, and ethnic considerations are the last thing on their mind when they mingle – and when they mingle, they talk deals.” 

 

Back to Nigeria's Family Wars

The long Yar'Adua legacy

Gemma Ware

 

President Umaru Yar’Adua’s father, Musa Yar’Adua, was the first minister of Lagos federal territory during Nigeria’s First Republic, between October 1960 and January 1966. Musa in turn was the son of Malam Umaru, an Islamic scholar and aristocrat, first appointed by the British as matawali (treasurer) of Katsina Emirate, one of the leading emirates that had emerged after the conquest of Hausaland by the early 19th-century Islamic scholar and reformer, Sheikh Usman Danfodio.?

 

Musa had three wives and many children. One of the wives, Hajiya Dada, had 12 children, including Shehu and Umaru Yar’Adua. Shehu joined the army after his secondary-school education and years later rose to become the second-in-command in the military regime that emerged following the February 1976 attempted coup in which General Murtala Mohammed was killed. The regime was led by a triumvirate of Generals Olusegun Obasanjo, Theophilus Danjuma and Shehu Yar’Adua. After their retirement in 1979, all three retained their interest in the affairs of state.

 

?Shehu started a political movement, which eventually became the basis of the Social Democratic Party, one of two parties allowed to register by General Ibrahim Babangida’s regime (1985-1993), but Babangida barred him from contesting the leadership. Thereafter, Shehu became the spearhead of the opposition to General Sani Abacha’s regime of 1993-1998. Abacha detained Shehu on a trumped-up charge of an attempted coup. He and Obasanjo were tried and sentenced to death. Pressure from home and abroad forced Abacha to commute the sentences to life. Obasanjo survived but Shehu was killed in prison in December 1997.

 

Back to Nigeria's Family Wars

Interview: Donald Kaberuka, African Development Bank President

 

The Africa Report: What are Africa’s prospects given the world economic situation?

 

?Donald Kaberuka: Economic growth for Africa will be at the maximum 4.5%. My colleagues at the IMF are putting the figures at below 4%. We are experiencing a fast-evolving situation and I’m sure that the numbers will be revised in the next three months. But we are concerned about the burst in the commodity bubble – all commodities. We are concerned by the decline in investment and the contraction of the private sector and what that means for macroeconomic balances.?

 

Which sectors do you think will be worst hit?

 

?The sectors which will be affected the most will be those which depend on international demand – minerals, oil, soft commodities and tourism. The second sectors which will be affected are those which are beginning to attract significant investment – this is mainly infrastructure, power generation, road construction and so on. But there is something in economics we call the ‘backward loop’ which means that once we have the key sectors of the economy contracting, then they impact on the financial system and a vicious circle begins. So I fear that the contraction of the real sectors of the economy could also affect the stability of the financial system, as companies are no longer able to service their loans and so on.?

 

What can the AfDB do to help weather the effects of the crisis??

 

Number one, we need to accelerate resource transfers so that money goes to projects and to countries quickly. President Ellen Johnson Sirleaf said that it is good to have all these resources but that we need to accelerate their transfer. Secondly, it is important to allow trade to continue functioning. Trade finance has dried up and we are putting in place a trade-financing facility for banks and exporting and importing houses to continue financing trade. Thirdly, we need to set up an emergency liquidity facility for institutions which may face a liquidity problem or companies that may wish to terminate projects because there is no liquidity. And fourthly, we should mobilise additional resources by developing quickly the continental markets so we can give fluidity to regions with excess reserves to assist regions with less reserves, for the benefit of both.?

 

What effect do you think that the financial crisis will have on the stability of African currencies, and how will this affect trade?

 

Already, the crisis is affecting us through equities, export revenues, and to some extent, currencies. As external revenues decline, our balance of payments position will weaken and, of course, currencies will depreciate. We don’t have enough reserves to defend our currencies if they are under strain. If you take the whole of Africa together, our foreign reserves are less than $400bn. Now that is less than Norway, one country of 4m people. This shows you the limited capacity of African countries to intervene in the markets if our currencies are under strain. So I hope that we can manage.

 

Back to Finance, The taps of credit run dry

Finance: The taps of credit run dry

Real import growth

As African credit markets begin to dry up, companies and governments anticipate a difficult year ahead


Read more...

Interview: Haile Gebrselassie, Ethiopian long-distance runner

 

The Africa Report: How much of Ethiopian athletics’s popularity is due to your success??Haille Gebrselassie

 

Haile Gebrselassie: People can see how I became successful. Everybody knows what I do outside running and can see the benefits of my businesses: the buildings, schools and everything. And then they think, “Oh, there is a possibility,” and they follow.?

 

You invest all your money in Ethiopia. Why?

 

?First of all, Ethiopia is my country. I was born here. I want to die here. And secondly, indirectly, because [when] I invest the money I have won in Europe or America or wherever, people can see what I am doing. Everybody knows that I have an opportunity to invest my money anywhere, but I invest here. But we need to do more, something else, something different, something which is important for many Ethiopians.?

 

You have built a school in the village where you were born. How has your village changed?

 

?When I studied, my school was 10 km away. Now the kids in my village, they don’t need to walk 10 km, the maximum is 5 km, which means it’s improving. In the village itself, there has been a lot of change: it is improving and it’s growing. But, the question is, is that enough? My answer is no, not yet. ?You cannot do anything without education, without teaching people, without showing them how to work. If anyone thinks that it is possible without education let him forget it. ?

 

What have been your best moments in athletics??

 

My best race was in 2000 in Sydney, between myself and Paul Tergat. We were very close to each other [only 0.09 seconds separated them]. That was the best race I ever ran. And if you ask me how many – maybe 27 world records, two Olympic Games, four world championships another four indoor world championships, and so on – it’s a lot. But my last race [in Berlin] was also one of my biggest achievements: I broke the world marathon record at 2 hours 3 minutes and 59 seconds.?

 

Do you regret not competing in the marathon in Beijing??

 

No, not at all. How would it have been possible for me to break the world record in Berlin if I had done that? But one thing I want to do is to win a marathon at the Olympic Games.

 

?In London??

 

That is what I’m thinking.?

 

And do you think you will still be running then??

 

Why not? Do you think I am old??

 

Well you are getting faster and faster.

 

?I am, yes. Look, I am 35 but I feel like 20.

 

Back to Athletics, Valuing life in Addis Ababa

Interview: Oyama Mabandla, Executive Chairman, Vodacom, South Africa

 

South Africans are adjusting to the new world prices for their minerals and the sudden reluctance of the banks to extend credit. If life is not going to get easier soon in the manufacturing sector because of Chinese dominance, the service sectors should propel the economy through the worst of it, with telecoms leading the charge

 

Oyama Mabandla ?is Non-executive Chairman of Vodacom and Executive Chairman of Langa Group, an investment holding company, South Africa

 

The Africa Report: How did the financial slowdown affect the operations of African companies in 2008, and what are the prospects for 2009??

 

Oyama Mabandla: In South Africa, we are seeing mergers and acquisitions drying up. You can’t get debt now from banks to do anything. The credit markets are on holiday. Some of the expansion that was under contemplation – that is southern companies going northwards – is slowing down. ?

 SA top 500 performers

Are the banks’ problems due to the global financial slowdown or to the internal dynamics in South Africa??

 

Both. The slowdown in debt provision has been happening since the latter part of 2007, ending up with the global contagion. Banks are conserving their firepower. This should be a buyers’ market because assets are cheaper, but nobody has the money because banks won’t lend. South African banks are very conservative. And the Africans who were looking to China as an alternative to the West didn’t think that China is also risk-averse. Chinese companies were among the first to leave the Democratic Republic of Congo. ??

 

Will telecoms fare better than other sectors in the slowdown?

 

Analysis of the Top 500 companies in Africa 2008

Search our interactive Top 500 ranking

?Indeed. The view is that we make money no matter what. At the lower end people may use our services less, but you’re going to see companies picking up on our other products. We are getting into data services in a big way, investing in new infrastructure.

 

??Looking at the Top 500 companies, is African manufacturing growing or contracting?

 

?Our manufacturing sector has eroded with the emergence of China. Our textile industry has been decimated. I’m certainly not seeing new industries strengthening in South Africa. What we’ve seen in South Africa of course is the emergence of ICT, and our banks remain very strong.??

 

South Africa dominates the Top 500 companies. Do you see any changes in the economic drivers there?

 

It’s mines and services, financial services, telecommunications services. Sasol – the coal-to-oil plant – is an exception; it’s become stronger in the last ten years. You have a lot of ICT companies in South Africa, such as Datatec. Most of the companies are extractive, and our retail sector – Shoprite, Pick ’n Pay, Spar – is very strong. They’ve grown in the last ten years with forays into Africa and the Middle East.??

 

With low growth and tighter credit, will the service sectors be squeezed? ?

 

Absolutely. But people have to eat. Food companies, especially those that have diversified, like Tiger Brands and Shoprite, are doing well, but Woolworths has stumbled. ??

 

And the banks? ?

 

Standard Bank is in a pretty strong position, largely because of Chinese investment, and they’re just a very well-run bank. First Rand group have some difficulties; they’ve closed down their international private-equity business. Absa is in robust health, as is Nedbank. Investec bought some toxic assets, but it’s a small bank so it hasn’t caused ructions. If you’re looking at the top four, three of them are in reasonably good health. On the insurance side, Old Mutual is in trouble – their US operation has been decimated and their share price has collapsed – but Sanlam is robust.

 

??When will commodity prices rise again? ?

 

With things like platinum, it will depend on the emergence of the North American auto industry from recession. We’re not going to see any recovery within 18 months.

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