Monday, September 1, 2008

Investors’ uneasiness with Rwanda holding back Lake Kivu gas-fired power project

By: Brindaveni Naidoo, 29/08/2008

A significant challenge preventing the development of the envisaged Lake Kivu gas-fired power generation project, on the Democratic Republic of Congo (DRC)-Rwanda border, is a lack of capital,according to chemical engineer Philip Morkel, who is also the technological developer, owner, operator and financier of some Lake Kivu projects.

It is envisaged that the project will produce 1 300 MW for over 50 years.

Speaking at the New Partnership for Africa’s Development/Southern African Development Community infrastructure projects conference, held in Johannesburg earlier this month, Morkel said that investors and banks considered Rwanda a risk because of its history.

Morkel said that this challenge, together with developing a technology that is clean, safe, effective, renewable and long term, had contributed to the delay in implementing the project.

However, he said a technological solution had been established, revealing that the project would be entering the procurement and construction phase in the next six months.

He added that feasibility studies and engineering had been completed for the development of new technologies for the extraction of gas from the vast lake.

Morkel is also the MD of Methane Hydrates, which has investors from South Africa, the US and Australia, and was established to develop the Lake Kivu power generation project.

The DRC and Rwanda stand to benefit equally from the project, but it was discovered 18 months ago that, while Lake Kivu was a significant resource, it was not well defined and that there were unresolved concerns about the lake and the safety of people living in surrounding areas.

Lake Kivu is bounded by two active volcanoes, and is situated in a tectonic zone that is semistable. Over the last 10 000 years, it has developed gas resources from within, and now contains about two-trillion cubic feet of methane gas, and 10-billion feet of carbon dioxide, besides other gases.

If these gases were to be released into the atmosphere once they reached saturation point, the lake would instantaneously produce about 40% of the world’s annual power generation-sourced carbon dioxide in one day. It could also produce a 300-m- to 500-m-thick blanket of cloud cover over the Rift Valley, and create tsunami-like conditions. It has been established that the gases in the lake have reached a saturation point of 60%.

Also specialising as an international expert in the extraction of gases from lakes, Morkel was appointed by both governments to participate in an expert working group to present a report on the lake, aimed at getting a better understanding of the lake.

The report, released in June this year, indicated that a very specific method could be used to recover gas from the lake safely and cost effectively. This would produce good-quality gas, containing 80% to 90% methane, for use in several industries.

Morkel explained that, over the next 50 years, gas can be continuously extracted from lake Kivu at a rate of 1 300 MW of gas energy, which can produce 400 MW to 800 MW of power. If the correct methods were used to source the gas from the lake, the project could sustainably produce about 300 MW of gas energy for the next millen- nium.

“But there is a bigger picture, and it is that methane can be used to establish a gas-to-liquids industry and produce liquid fuels and pipeline gas. There are many benefits to be derived from this resource.”

Gas-to-power plants developed using the technological innovation developed by Morkel can produce power at a cost of US7c/kWh. The cost of such power to government, compared with oil-fired power, will be reduced by 80%. “This is significant in Rwanda, which has a gross domestic product per capita of less that $250 a year, and where currently only 6% of the population is connected to power. Now we have an opportunity to generate power that is 80% cheaper, and to also develop enough power to support neighbouring countries,” he said.

Other countries that stand to benefit from this resource include the DRC, Burundi, Tanzania and Uganda, where power can be routed at a cost of US10c/kWh to US12c/kWh.

Another project in the pipeline is the Rusumo Falls hydropower project, on the Tanzania-Rwanda border. This project will generate about 62 MW of power; however, a lack of finance is also hindering the progress of the project.