"Methane will eventually take the lead," Rwandan Energy Minister Albert Butare told Reuters on Thursday.

"The only problem remaining is that it will be the first time to exploit methane from underwater globally, so it will take a bit of time to come up with appropriate technology."

He said the government would launch a 5 megawatt pilot plant from the gas in a couple of months, and that authorities were in talks with an American investor to put up a 100 mw project.

The potential power output from the lake is 350 mw, he said.

"We are looking to prove the technology, to make sure that we get the electricity we are talking about and that the environment, that is the lake, remains stable."

Only 5 percent of Rwanda's 10 million people are connected to electricity, but the government targets access for 34 percent of the population by 2020.

Butare said the country has an installed capacity of 35 mw of hydroelectric power but is constructing another plant for 10 mw and is in negotiations for a 27.5 mw dam.

It has also identified 333 sites for potent micro hydropower plants.

Butare said the country, still scarred by a 1994 genocide that killed 800,000 people, has seen no investment in power generation in the last quarter century.

In 2007, national production stood at 165.4 GWh although total demand stands at 248.7 GWh, government statistics showed.

In order to minimise losses from faulty transmission lines, the minister said the government would repair parts of the grids.

"We are currently recording over 20 percent of technical and commercial losses," he said on the sidelines of an investment conference showcasing opportunities in the five-nation East African Community to which Rwanda belongs.

"We want to rehabilitate and extend new lines."

The country has two transmission networks -- 285 km of 110 kilovolt lines and another 64 km of 70 kilovolt lines.

Rwanda is also developing solar, biomass and wind plants.

(For full Reuters Africa coverage and to have your say on th e top issues, visit: http://africa.reuters.com/) (Editing by James Jukwey)