Rwanda: MPs Approve Rwf96 Billion Loans for Roads

Parliament has ratified three agreements paving way for government to borrow on concessional terms to the tune of USD 153 million (Rwf96 billion) for the construction of the Rusizi – Karongi road which is part of the greater northern corridor.
Two of the agreements were signed between government, AfDB and Exim Bank of China in respect of credit lines worth USD 40.5 million (Rwf25.4 billion) and USD 113.4 million (Rwf71.2 billion) respectively.
Exim Bank of China credit facility is priced at 1.5 percent for a period of 20 years with a grace period of 7 years, while that of AfDB is payable in 40 years at varying interest rates of 1 percent for the first 10 years, and 3 percent for the subsequent loan term.
Specifically, the credit facilities will finance the road stretching 66 kms intended to link the Northern and Southern provinces.
“We need to ease transport network between the two provinces… to ease trade, tourism..,” the minister of Finance John Rwangombwa told Parliament chaired by Speaker Rose Mukantabana this week.
Rwangombwa told parliament that government had made the borrowings to enable it improve a network of roads aimed at linking Rwanda to neighbours.
“This particular road project goes a long way to linking Rwanda to DRC and Burundi…,”MP Gonzague Rwigema speaking to The New Times during an interview.
Rwangombwa told the House that the procurement process for the works on 66 km road project which is expected to run for 3 years is complete and works are scheduled to begin mid next year.
As a matter of urgency the House ratified the agreements without going through the normal scrutiny by relevant committees.
“We are borrowing for infrastructure because it is a key component of our development agenda…besides, you do not get grants for roads,” Rwangombwa told The New Times during an interview.
He added that the whole road project is 185 km estimated to coast USD 380 million which is being sourced from a consortium of lenders, including Arab Funds.
He said government is borrowing on concessional terms which is not expensive and is investing in viable projects that will enable a pay back of the loans.
Government has in the current budget 2012/2013 allocated 23.3 percent or Rwf 321.2 billion to the infrastructure sector-transport and energy, an increase of 25 per cent over last year’s allocation of Rwf256.9 billion.
But with the recent aid cuts by donors, analysts see governments being forced to scale back some of the projects.
Other key projects that need funding include rehabilitation and maintenance of feeder roads, projected to cost Rwf 20 billion, increasing access to electricity and speeding up ongoing hydropower projects.
Also planned include completion of the Kigali-Ruhengeri road (83.1 km).
Energy projects include fast-tracking micro hydro sites with an estimated capacity of 24.18 MW in the 10 poorest districts in the country to supply power to 61,000 households by 2012/14.
This is expected to increase access to electricity in poor households to 13 per cent by the end of 2013, up from 2 per cent.
“We expect to get the balance of about $100 million soon – we have different financiers offering us the money and we are negotiating the terms,” Finance Minister John Rwangobwa told reporters recently.
The government has already borrowed $180 million to finance the convention centre and purchase jets for RwandAir and is likely to borrow for the construction of the new Bugesera Airport.
Under the conditions of the current IMF Policy Support Programme, this fiscal year, government can borrow up to $240 million on non-concessional terms.

This leaves room for government to borrow an additional $60 million. 

Source :

Posted on : 30 Nov,-0001

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