Rwandan consortium injects $400 million in methane gas race

Tuesday February 12 2019


Gas being extracted from Lake Kivu. Rwanda has signed a $400 million deal to produce bottled gas from the lake. PHOTO | CYRIL NDEGEYA | NMG  

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A consortium of Rwandan and international investors is set to inject over $400 million into the production of compressed gas from methane gas extracted in Lake Kivu.

This deal is expected to boost Rwanda ambitions to significantly cut over-reliance on charcoal and firewood for cooking in homesteads by providing compressed gas as an alternative.

The financing is the single largest investment Rwanda has seen in methane gas extraction, and will be managed by a newly formed special purpose vehicle called Gasmeth Energy Limited.

The new consortium is financed by individual investors and international companies, whose shareholding is still under structuring, officials said.

Among the leading shareholders are Rwandan business magnate tycoon, Egide Gatera, and Korean conglomerate LS Group, officials said.

A host of American investors are also among the project financiers but their identity was not disclosed.

A five year agreement was signed last week between the government of Rwanda and Gasmeth, which will enable the company to construct a gas extraction and processing plant at Lake Kivu.

“Gasmeth Energy will extract and separate methane gas from water and thereafter transport it to an onshore plant where they will compress it. The compressed natural gas will be distributed on both the local and international market,” a statement from Rwanda Development Board reads.

The project also aims to employ over 600 people during its construction phase.

“There are three phases which will last over 5 years. Phase one starts immediately with phase two starting six months after. The third phase will be two to three years. We are planning for full start up of phase one and two in 2021,” Stephen Tierney, CEO of Gasmeth told The East African.

The government hopes that the natural gas produced by the plant will help reduce use of firewood and charcoal for cooking, a practice still widespread in Rwanda.

Government says that the methane gas which is trapped under the lake provides an energy resource valued at billions of dollars for the Kivu region, but it could pose a dangerous hazard to surrounding life if the gas builds up and explodes to the surface.

“We therefore welcome the Gasmeth Energy project because not only will it reduce the risk of a methane gas explosion, it will also provide jobs, reduce Rwanda’s natural gas import bill, increase gas exports and provide cleaner cooking fuel for Rwandans”, Clare Akamanzi, CEO of RDB said in a statement.

Gasmeth will join two other international companies seeking to produce gas and electricity from Lake Kivu - which is a large water body lying between Rwanda and the Democratic Republic of the Congo.

Symbion Power, an American firm, invested $100 million in 2017 to produce electricity from the lake while British firm ContourGlobal has invested well over $140 million for the same purpose since 2009.

In 2015, Contourglobal successfully saw its methane gas plant – KivuWatt - connected to the national electricity grid with a capacity to produce 25 megawatts of electricity.

Contourglobal plans to increase its capacity to 100 megawatts, which is almost half Rwanda’s total electricity output of 218 megawatts.

American firm Symbion Power is expected to add at least 50 megawatts produced from methane gas to the national grid by 2022.

Methane gas was first discovered in Lake Kivu in 1936, and it is enough to power Rwanda for over 50 years, according to assessments by Contourglobal.