Rwanda: Electricity Tariff Reform

Type Working Paper - MPRA Paper
Title Rwanda: Electricity Tariff Reform
Publication (Day/Month/Year) 2006
Rwanda is facing a severe electricity crisis. Higher demand and production cost as well as a reduction in revenues in real terms have led to large operating losses for the electricity operator Electrogaz. In order to deal with this crisis, a doubling of electricity tariffs was recently approved, from a flat rate of RWF 42/kwh to a flat rate of RWF82/kwh. This flat rate may not be appropriate to protect some of the poorer residential customers of Electrogaz from the necessary increase in the average level of electricity tariffs. For this reason, Electrogaz has recently proposed to implement an Inverted U Block Tariff Structure. The objective of this paper is to provide a preliminary assessment of the distributive properties of the new tariff proposal, as well as simulations for the properties of alternative tariff designs using recent household survey data. The results show how simple techniques can be implemented fairly rapidly in order to assess the benefit incidence and poverty impact of policy proposals.

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