34417 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized A COUNTRY FRAMEWORK REPORT ADVISORY ADVISORY FACILITY INFRASTRUCTURE PUBLIC-PRIVATE THE WORLD BANK Private Solutions for Infrastructure in Rwanda Private Solutions for Infrastructure in Rwanda A Country Framework Report The Public-Private Infrastructure Advisory Facility and the World Bank Group © 2005 The findings, interpretations, and conclusions expressed herein are those of The International Bank for Reconstruction the author(s) and do not necessarily reflect the views of the Board of Execu- and Development/ THE WORLD BANK tive Directors of the World Bank or the governments they represent. 1818 H Street, NW The World Bank does not guarantee the accuracy of the data included in Washington, DC 20433 this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of Telephone:202-473-1000 the World Bank concerning the legal status of any territory or the endorse- Internet: www.worldbank.org E-mail: [email protected] ment or acceptance of such boundaries. All rights reserved. Rights and Permissions Manufactured in the United States of America. The material in this work is copyrighted. Copying and/or transmitting por- tions or all of this work without permission may be a violation of applicable 1 2 3 4 07 06 05 04 law. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750- 8400, fax 978-750-4470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street, NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected] ISBN 0-8213-5965-7 Library of Congress Cataloging-in-Publication Data Private solutions for infrastructure in Rwanda. p. cm. “Published jointly by the Public-Private Infrastructure Advisory Facility and the World Bank”—Preface. Includes bibliographical references. ISBN 0-8213-5965-7 1. Infrastructure (Economics)—Rwanda. 2. Public-private sector cooperation— Rwanda. I. Public-Private Infrastructure Advisory Facility. II.World Bank. HC875.Z9C374 2004 363.6'0967571—dc22 2004053502 Contents Preface ix Abbreviations and Acronyms xi Executive Summary 1 The Context for Reform 1 Infrastructure Reform in Rwanda 1 The Country Framework Report 2 Summary of the Sector Reviews 2 Cross-Cutting Issues 6 Prioritized Recommendations 10 1. Introduction: Policies, Objectives, and the Role of the Private Sector 11 Background 11 Objectives and Scope of the Country Framework Report 12 Principles of Private Sector Participation 13 2. The Transport Sector 16 Roads 16 Airports 26 Rail 28 Water Transport 29 Notes 31 3. The Energy Sector 32 Sector Structure, Roles, and Responsibilities 32 Policymaking, Planning, and Regulation 32 Electricity 34 The Gas Sector 35 Investment Needs and Priorities 37 Potential Sources of Investment Financing 38 Opportunities for Private Sector Participation 38 Issues 39 Recommendations 40 Notes 41 v Contents 4. The Water and Sanitation Sector 42 Sector Structure, Roles, and Responsibilities 42 Policymaking, Planning, and Regulation 42 Sector Performance 45 Opportunities for Private Sector Participation 50 Issues 53 Recommendations 55 Note 56 5. Common Issues in the Electricity and Water Sectors 57 Management and Human Resources 57 Commercial and Financial Management 57 Management Contract 57 Recommendations 58 6. The Telecommunications Sector 59 Sector Structure, Roles, and Responsibilities 59 Policymaking, Planning, and Regulation 60 Sector Performance 64 Opportunities for Private Sector Participation 66 Issues 67 Recommendations 69 Note 69 7. Cross-Cutting Issues 70 Institutional Capacity 70 Local Financial Markets 72 Regulation 72 Accounting System 74 Taxation System 74 Legal System 75 Bid Evaluation Process 79 Project Selection, Prioritization, and Planning 79 Government Policy Communication with the General Public 80 Environmental Issues 80 Other Cross-Cutting Issues 82 Proposed Implementation Schedule for the Recommendations 82 Appendix A The Environment 89 Existing Environmental Institutions, Policies, and Legislation 89 Environmental Issues in the Transport Sector 92 Environmental Issues in the Energy Sector 92 Environmental Issues in the Water Supply and Sanitation Sector 95 Environmental Issues in the Telecommunications Sector 96 Ecotourism in Rwanda 97 Appendix B The Legal System 98 Rwandan Land Law 98 Customary Law 98 Land Law Reform 98 Rights of Ownership 99 Appendix C Road Maintenance, Rehabilitation, and Reconstruction Costs 100 vi Contents References 103 Boxes A.1 Requirements under European Commission Directive 97/11/EC for the Completion of Environmental Impact Assessments for Transport-Related Infrastructure Projects 92 A.2 Requirements under European Commission Directive 97/11/EC for the Completion of Environmental Impact Assessments with Respect to Infrastructure Projects in the Energy Sector 93 A.3 Requirements under European Commission Directive 97/11/EC for the Completion of Environmental Impact Assessments with Respect to Infrastructure Projects in the Water and Sanitation Sectors 95 Figures 2.1 Roads: Roles and Responsibilities 17 2.2 Airports: Roles and Responsibilities 26 3.1 Energy: Existing and Future Key Roles and Responsibilities 33 3.2 Benchmarking Data in Electricity 36 4.1 Urban Water Supply: Roles and Responsibilities 43 4.2 Rural Water Supply: Roles and Responsibilities 44 4.3 Unaccounted-for Water in African Water Utilities 46 4.4 Number of Connections of African Water Utilities 46 4.5 Average Price of Water Supplied by African Water Utilities 47 6.1 Telecommunications: Roles and Responsibilities 60 6.2 Telecommunications Networks in Rwanda 62 6.3 National Teledensity 64 6.4 Fixed-Line Waiting Lists 65 6.5 Fixed-Line Tariffs 65 6.6 Teledensity and Per Capita Gross Domestic Product 66 A.1 The Vicious and Virtuous Cycles Relating Deforestation to the Quality of Water 94 Tables ES.1 Sector-Specific Opportunities 7 ES.2 Cross-Cutting Constraints 8 1.1 Foreign Direct Investment in Rwanda 14 2.1 Extent of the Classified Road Network 18 2.2 Condition of the Classified Road Network 19 2.3 Air Cargo Rates for General Cargo 27 2.4 Commercial Traffic 30 2.5 Annual Traffic from Gisenyi to Cyangugu, 1985 30 2.6 Estimated Traffic, Gisenyi to Cyangugu, 1990 30 3.1 Electricity Provision in Rwanda 34 3.2 Rehabilitation of Assets in the Energy Sector 37 3.3 Proposals for New Generation Investment 37 3.4 Sources of Investment Financing 38 4.1 Electrogaz Water Tariffs 47 7.1 Implementation Schedule for Action Plan 83 C.1 Expenditure and Investments Associated with Road Building, Rehabilitation, and Maintenance of Various Types of Roads in Rwanda 100 vii Contents C.2 Expenditure and Investment Required to Rehabilitate the Paved Road Network in Rwanda 101 C.3 Expenditure and Investment Required to Rehabilitate the Unpaved Main Road Network in Rwanda 101 C.4 Expenditure and Investment Required to Rehabilitate the Unpaved Secondary Road Network in Rwanda 101 C.5 Investment Projects: Base Scenario 102 C.6 Investment Projects: Alternative Scenario 102 C.7 Annual Road Maintenance Projects: Cost Summary 102 viii Preface This Country Framework Report for Rwanda is one the World Bank and other development agencies, as of the first in a series of country reviews aimed at im- well as discussions with representatives of the private proving the environment for private sector involve- sector. ment in infrastructure. Prepared at the request of the The Country Framework Report process was sup- Rwandan government, the report has three main ob- ported by a working group comprising representatives jectives: of the government, private sector, and bilateral donor • To describe and assess the current status and per- agencies. Members of the working group from the formance of key infrastructure sectors Rwandan government include Jean Demacene • To describe and assess the policy,regulatory,and in- Ntawukuriryayo, Minister of Infrastructure; Sam stitutional environment for involving the private Nkusi, State Minister of Energy and Communications; sector in those sectors Munyanganizi Bikoro, State Minister of Water; • To assist,through the above processes, policymakers Antoine Munyakazi-Juru, Ministry of Finance and in framing future reform and development strate- Economic Planning; Joseph Akilimali and Marlene gies and potential private sector investors in assess- Nyirubutama, Privatization Secretariat; François ing investment opportunities. Xavier Havugimana, Makuza Kanamugire, Abraham This report was begun under the auspices of the Makuza, Bruno Mwanzafunzi, J. Baptiste Ngwijabanzi, World Bank Group’s Infrastructure Action Program, Straton Nzeyimana, Felicien Rukiriza, and Silas with funding from the World Bank and the Japanese Ruligana, Ministry of Infrastructure;Eugène Kivunan- government. It is being published jointly by the World goma, Multisector Regulatory Agency; Jean Kanya- Bank and the Public-Private Infrastructure Advisory muhanda, Central Public Investments and External Facility, the multidonor technical assistance facility es- Finance Bureau; Patrick Rugumire, Ministry of Trans- tablished in July 1999, which is carrying forward