Kenya: Govt Launches US$1.9 Billion Project to Boost Energy Production
By Ben Omondi
NAIROBI--Kenya’s efforts to improve its energy production capacity has received a boost with the launch of the Kenya Electricity Expansion Project (KEEP), which is part of the government’s Electricity Access Scale-up programme and meant to increase the country’s generation capacity.
The electricity expansion project, set to cost a total of US $ 1.9 billion with financing from both the government and concessional funds provided by various donor organizations, is aimed to improve the efficiency and quality of electricity supply and also expand access to electricity in urban peri-urban and rural areas.
Speaking during the launch of KEEP, energy minister Kiraitu Murungi said that the project is the result of a consultative forum held in Nairobi one year ago on October 22, 2009 between the government, donors and other stakeholders during which the government presented a prospectus of projects aimed at meeting the country’s projected electricity demand in the short-to-medium term.
“KEEP is a collaborative effort by the government and its agencies and development partners comprising IDA, JICA, AFD, EIB, AfDB, government of Spain, KfW, Exim Bank of China and Government of Belguim,” said Murungi.
The funds are to be used for drilling for appraisal wells, geothermal generation, transmission, distribution and energy sector institutional support. Drilling for production wells will cost US $ 327 and is financed by China’s Exim Bank (US $ 95 million); KfW (US $ 15 million) with the Kenya government contributing US $ 217 million.
The French Development Agency (AFD) has provided US $ 67.2 million out of which US $ 62.4 million will be used to purchase two drilling rigs for Geothermal Development Company (GDC) while the balance of US $ 4.8 million will be used for capacity building at the ministry of energy and GDC.
KEEP’s generation component is meant for the development of 280 megawatts (MW) of geothermal capacity, which would raise Kenya Electricity Generating Company’s (KenGen’s) geothermal generation from the current 105 MW to 385 MW by 2013.
“As this energy source is not affected by the vagaries of weather and volatility of international oil prices, it will not only contribute to provision of base-load generation but also reduce the cost of electricity to consumers,” said Murungi.
The total cost of this component excluding production drilling will be US $ 1.03 billion. The component is to be financed by a consortium consisting of IDA (US $ 120 million); JICA ( US $ 323 million); AFD (US $ 210 million); EIB ( US $ 168 million); KfW ( US $ 84 million) with KenGen contributing US $ 130 million.
KEEP’s distribution component is meant to upgrade and expand the Kenya Power and Lighting Company’s (KPLC’s) distribution network in urban and rural areas at a total cost of US $ 251 million, with priority loads in rural areas being electrified.
The funds for KEEP’s distribution component are to be provided by IDA (US $ 130 million); KPLC (US $ 30 million) while new users and customers are expected to contribute about US $ 91 million.
The distribution component is expected to enhance electricity connectivity to poor households through a US $ 5 million grant from the Global Partnership on Out-put Based Aid (GPOBA) and a US $ 10 million revolving fund financed by AFD.
The grants are further expected to aid the government’s efforts in meeting its objective of increasing access to electricity in both rural and urban areas from the current 23 per cent to more than 50 per cent by 2020.
The launch of KEEP, whose primary objective is to improve supply and quality of electricity in the country, comes at time when the country is facing the challenge of providing affordable electricity to all sectors of the economy.
The other challenges have been the inability to expand the transmission system at the same pace with the rapid expansion of the Rural Electrification Programme as well as the accelerated consumer connectivity in both rural and urban areas which has resulted in low power quality for most users due to voltage drops.
To meet the challenges however, the ministry of energy expects to have more than 1,200 km of 132 kilovolts (kv) back-bone lines constructed by 2012/13. A number of 400 kv lines, including a 220 kv Nairobi transmission ring, are also expected to be constructed by 2013 to deliver adequate power and stabilize the country’s power supply system.