The government has shelved the Mutobo water project after failing to attract investors amid increasing demand for stable water supply across the country.
The suspension of the project means water utility company Water and Sewage Corporation (Wasac) will continue to incur huge operational costs, which are passed on to the consumer.
The biggest setback for the project came after Chinese firm Sinohydro Corporation, which had shown interest in investing in the project, developed cold feet at the last minute.
In 2015, Sinohydro committed to build, own and later transfer the project after signing an MOU with the government. However, Rwanda Today found out that the MOU expired without the project kicking off.
While specific details are not available about why the Chinese firm did not go ahead with the project, the government says it found a cheaper option.
The government is the main supplier of water in Kigali while private investors are the main suppliers in the rural areas.
By 2013, Wasac was generating about Rwf10 billion in water sales annually from approximately 110,000 customers.
“We put the $400 million project on the market and there were no investors ready to take it on,” said Claver Gatete Minister of Infrastructure.
“Hower, we later found out that we have other sources of water in Kigali and there is no need to take up this expensive project,” said Mr Gatete.
The government is now exploring ways of investing in Mutobo Springs to supply water to Musanze and Rubavu districts.
While the government is optimistic about tapping water from sources near Kigali, experts say Wasac will continue to incur high operational costs fuelled by expensive electricity.
A former Wasac employee said the high operational costs due to expensive power were set to drop when Mutobo Water Supply project was complete.
The plan was to tap 118,800 cubic metres of water from Mutobo Springs in Musanze and direct it to reservoirs in Kigali.
Experts say Wasac would have also reduced the huge purification expenses it incurs cleaning the turbid Nyaborongo river water. The quality of water from Nyabarongo is compromised by pollution from upstream mining activities.
Officials at Wasac say the cost of purifying the water makes up 21 per cent of the total cost of producing water, excluding the cost of filtration, which is passed on to the consumer.
In order to keep the cost of water low, the government pumps in public funds in order to have water that is affordable for households, industries and institutions.
This sees the average cost of 1,000 litres set at Rwf323 in Kigali.
Mr Gatete said Kigali is currently over supplied with water after several projects including Nzove were completed, pushing supply to 145,000 cubic metres daily and the city needs 138,000 cubic metres.
Despite the increasing capacity, some areas still experience water shortages due to having a few water treatment plants and pumping stations.
The old infrastructure used for distribution also needs to be replaced as the old, small pipes can no longer handle the high water pressure.
“The population has increased, but we are still using the small pipes and they cannot distribute the water adequately,” said Mr Gatete.