Since early 2000s, Rwandan economy
has grown at an average of around 8 percent, much above the regional average.
Per capita income has increased over three-fold, and regulatory norms have
eased rapidly. In fact, according to Doing Business 2015, Rwanda is ranked 3rd
in Sub-Saharan Africa, after Mauritius and South Africa, and 46th rank
globally, in ease of doing business ranking.
Infrastructure Gap: However, the country continues to face huge infrastructure
deficit in sectors such as road, railways and airports, among others. Even
though development of the country is strongly driven by political willingness
and mass participation, the country has limited resource base as well as technological
gap, and limited expertise to keep in place necessary infrastructure.
International air transportation in
Rwanda is limited to the Kigali International Airport (KIA), which has experienced
significant growth in traffic across years. In 2010, KIA handled 14,766
aircraft movements including 11,174 passenger and combination aircraft, which
transported 314,230 passengers and 6,352 metric tonnes of international cargo.
According to a Study by African Development Bank, medium-term growth of traffic volumes in Rwanda are estimated at about 1.3
million passengers, 15,500 tonnes of cargo and 17,712 aircraft movements per
year by 2025.
The current infrastructure set up would
not be able to support such massive growth, and need to adapt to growing demand and changing technology.
Identification of the Project: One of the projects which Rwanda has identified is a new
airport at Bugesera District, which is located at around 40 kms away from Kigali city,
the country’s capital. The project cost
is estimated at US$ 750 million.
The new airport at Bugesera will not
only make Rwanda a world class gateway, but also provide the flexibility to
expand and develop to become a key hub airport within the East Africa region,
with higher handling capacity, both cargo and passengers.
Plan of Construction: Keeping in view Rwanda’s situation, this project could work
best within a PPP framework. It could be developed under Build Own Operate Transfer (BOOT) Model, with a concession period of 30 years. The ownwership would be transferred back to GoR after the concession period.
Construction of the airport, under
PPP framework would be in phases. Phase 1 would involve construction of
passenger and cargo terminal buildings, 4.2 km long runway (which could even
handle largest commercial aircrafts), airfield and other infrastructure to support
the operation of an international airport, including air traffic control tower
building and an airport rescue and fire fighting facilities, among others.
Phase 2-4 would provide for further expansions with the ultimate phase
involving the construction of additional runway and another passenger and cargo
terminals.
Sources of fund (debt and equity) would be beyond GoR’s funds, and would,
therefore, include other stakeholders
like airport operators, banks and other investor groups. GoR would acts as a
shareholder / equity sponsor along with private parties in the Airport Company
(Private Agency).
Risk Sharing: As regards risk sharing, project would
be allocated to private entities as they are best equipped to manage those
risks. The Private Agency would be
responsible for planning, project design including environmental and social
impact assessments, quality control and assurance, and maintenance during the
concession period. This would ensure long-term value-for-money (VFM) as appropriate risks are being transferred to the private sector over the life of the project – from design/ construction to operations/ maintenance.
The cost incurred in airport development would be recovered through collection of user fees. User fees are decided based on user affordability, their willingness and public authority’s value for money requirement.
The cost incurred in airport development would be recovered through collection of user fees. User fees are decided based on user affordability, their willingness and public authority’s value for money requirement.
The Government of Rwanda (GoR) would ensure the following to make PPP work:
- Land acquisition for construction of the new airport
- 6 or 4-lane road infrastructure (Self financing Toll Expressway) from the new airport to Kigali city, and 4-lane road with other major township
- Necessary legal frameworks safeguarding both pubic and private sector's interest
- Close monitoring of implementation of projects by Private Agency as per agreements, and if necessary, with penalty
The key features of
this proposed PPP, which also provide strong case for attracting private players, would include:
- Strong Government's commitment and support for the development of aviation sector, ensuring political willingness and support in the PPP project
- Law governing civil aviation sector in place, a strong case for legal and regulatory support
- Continued growth in tourism, ensuring flow of revenue stream in the long run
- Potential for increase in travel in the region, and to emerge as regional aviation hub, catering to population base of over 153 million East Africa Community (EAC), as well as international tourism
- Availability of aviation colleges for training airline staff
- Creating employment opportunities for Rwanda citizens in the aviation industry
- Conducive investment climate
References:
African Development Bank Group, 2013, Rwanda Transport Sector – Review and Action Plan.
World Bank Group, 2014, Doing Business 2015: Going Beyond Efficiency.
African Development Bank Group, 2013, Rwanda Transport Sector – Review and Action Plan.
World Bank Group, 2014, Doing Business 2015: Going Beyond Efficiency.
