Kenya to Export 30 Mw to Uganda
The East African (Nairobi)
NEWS
March 21, 2005
Posted to the web March 23, 2005
By Peter Munaita
Nairobi
PETER
MUNAITA writes that Uganda will buy from the Kenya Power and Lighting Company
(KPLC) between 20 and 30 Megawatts In a reversal of fortunes, Kenya, will
export 30 megawatts of power to Uganda, once trials that started early last
month are complete.
Top officials of the Uganda transmission company said last week that
negotiations for the imports were almost complete. Kenya has been importing
power from Uganda since the commissioning of the Owen Falls dam in 1954.
William Osanda, a technician, at the control room of Olkaria 1
Geothermo Station Picture: Anthony Kamau
Uganda is expected to pay between $750,000 and $1 million per month for
the supplies, the same amount Kenya has been paying. The supply is meant to
ease load shedding during the off peak hours between 11 pm and 6 pm.
Energy Minister Syda Bbumba said the Uganda Electricity Transmission
Company (UETC) had formalised negotiations with the Kenya Power and Lighting
Company (KPLC) to buy between 20 and 30 megawatts. Export of more power is
also possible since KPLC is understood to have a surplus of 250 megawatts
during off-peak hours.
Uganda is facing a power shortage in excess of 130 megawatts during the
peak hours between 6 pm and 11 pm. The government blames the shortage on a 2
metre fall in the water level at the Owen Falls dam in Jinja, 80 kilometres
east of Kampala. The water level has been low since October last year due to
poor rains. The peak demand is 347 megawatts against a supply of 220
megawatts.
The operations and maintenance manager at UETC Engineering, William
Kiryakiha, said that many customers had already benefited from the trials,
whose outcome will inform the transmission of power from Kenya.
"We are using the same pipes we used while exporting power to Kenya, so
when we are satisfied with the trials, transmission will begin, probably in a
few days," Mr Kiryakiha told The EastAfrican. Negotiations on the trial phase
were completed on February 15 this year.
Mrs Bbumba also said that UETC would commission a 50 megawatt thermal
plant by May this year.
"We are still in the procurement stage but the problem is being
addressed," said Uganda's energy Permanent Secretary, Kabagambe Kaliisa.
Alternative renewable energy sources, including garbage and sewage at the
Kampala City Council's Kiteezi dumping site, were also being considered.
Critics counter the official expla- nations for the shortage, saying
the Uganda government ignored warnings against building a second dam next to
the old one and warn that the country's power problems may escalate since the
50-year-old Nalubale Power Station needs to be closed for reconstruction.
The power imports by Uganda coupled with KPLC's increasing
profitability and the proposed public listing of the Kenya Electricity
Generating Company (KenGen) suggests that Kenya's power sector is coming out
of the woods.
Only four years ago, Kenya was grappling with a load shedding programme
caused by a lengthy drought, a situation that was not helped by lack of
investments in new production lines and an 8 per cent per annum growth in
demand.
The cost to the economy was enormous - $60 million a month by World
Bank estimates - in terms of investments in alternative electricity sources
like diesel generators, fewer opportunities for factory workers and, for
resource constrained plants, temporary or permanent shut downs.
The country is now operating on a different grid, with Kengen turning
out 250 megawatts more than the KPLC, the transmission and distribution
monopoly, can offload to the market during off-peak hours.
"We have a 250 megawatt surplus during the day (off-peak)," an industry
source told The EastAfrican, adding that KPLC can export as much as Uganda
wants once negotiations between the two governments are complete and endorsed
by the Electricity Regulatory Board.
Uganda has traditionally supplied Kenya with electricity to satisfy
local demand. At the height of the load shedding programme, Uganda was
required to provide 60 megawatts but could only manage 35 megawatts due to its
domestic needs.
The role reversal today is part due to environmental and integrity
concerns that halted the construction of the Bujagali dam, which was to be
connected to the national grid in 2003, putting paid to Uganda's capacity
expansion efforts.
A limit to the extent to which the two neighbours can bail each other
out exists in the form of similar off-peak and peak demand patterns. Kenya is
also experiencing some capacity limitations, largely blamed on transmission
losses of over 20 per cent, which KPLC needs Ksh16 billion ($208 million) to
address.
"Our capacity situation is not very good," an industry player said.
However, the situation could improve drastically from 2007 when two projects -
Sondu Miriu (hydro) and Ol Karia II (geothermal) - come onstream with a joint
capacity of about 100 megawatts.
KenGen is also understood to be interested in purchasing the Westmont
independent power producer (IPP) floating barge unit in Mombasa to enhance
capacity in a deal that is worth about Ksh450 million ($5.8 million),
according to sources.
The condition of the retired barge, also the subject of an ownership
dispute in Malaysia, would have to be verified by KenGen experts before
concrete negotiations begin. Though registered overseas, Westmont is believed
to be owned by Kenyan businessmen who had a long association with the energy
sector during former president Daniel arap Moi's 24 year-reign, which ended in
2002.
The government intends to offer 30 per cent of KenGen's Ksh74 billion
($961 million) assets to private investors in an initial public offering (IPO)
at the Nairobi Stock Exchange before the end of the year, broadening the
parastatal's options for raising capital.
The Treasury is in the process of recruiting transaction advisors for
the issue, which is believed to have informed the return of Esther Koimett as
Investment Secretary in a reshuffle of public officials by President Mwai
Kibaki two weeks ago. Ms Koimett is said to be well versed in privatisation
matters.
Analysts see the KenGen IPO doing well on the back of rising demand for
power and KenGen's Ksh12.3 billion ($159.7 million) preferential holding in
KPLC, which last week reported Ksh850 million ($11 million) gross profit for
last year, a leap from record Ksh379 million ($4.9 million) the previous year.
The company had accumulated losses since 1999.
KenGen's profit in 2004 was Ksh2.4 billion ($31 million) compared with
Ksh4.9 billion ($63 million) in 2003 following a revision of bulk tariffs for
KPLC in a Cabinet-endorsed financial restructuring of the two power utility
firms.
Additional
reporting by Barbara Among and David Malinga in Kampala
