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
Do you Yahoo!?
Yahoo! Small Business - Try our new resources site!
_______________________________________________ Ugandanet mailing list [email protected] http://kym.net/mailman/listinfo/ugandanet % UGANDANET is generously hosted by INFOCOM http://www.infocom.co.ug/
