Tuesday, July 9, 2013

Loud silence on US’ Power Africa project one week after tour

By IMMACULATE KARAMBU ikarambu@ke.nationmedia.om

African governments are yet to get a clear operational framework for implementing the Power Africa Initiative, one week after it was launched.

The initiative, which was launched by US President Barack Obama during his recent tour of Africa, is meant to increase access to electricity in six Africa countries, among them Kenya and Tanzania.

This would be achieved through investments to strengthen electricity generation and transmission infrastructure, as well as increasing power generation capacity.

“We are not sure whether the project will be implemented through collaboration with existing power generators or it will involve completely new investments. We are yet to get the finer details regarding implementation of the project,” said Mr Kaara Wainanina, a senior communications officer at the state-owned Kenya Electricity Generating Company (KenGen).

The Power Africa Initiative is worth $16 billion (about Sh1.3 trillion) of which $7 billion (about Sh600bn) financial support will come from the US government over five years while $9 billion will encompass investments from the private sector, in form of cash and technical assistance.

General Electric, an American company involved in power generation, among a host of other businesses, has expressed interest in partnering with the initiative to bring on board an additional 5,000 megawatt of electricity production capacity in Tanzania and Ghana.

Since President Obama’s announcement of the initiative on June 30, in South Africa, the project has attracted private investors who have collectively pledged investments to the tune of more than $7 billion (about Sh600bn) in power generation projects across the six countries.

In Kenya, for instance, the African Finance Corporation intends to invest part of a $250 million budget (Sh21 bn) it plans to dedicate to power sectors in Kenya, Ghana and Nigeria as it aims to reach the billion dollar mark in investments in sub-Saharan Africa energy projects.

Aldwych International, which is part of the Lake Turkana Wind Power Company that is setting up a 300 megawatt wind plant in Turkana County, plans to invest $1.1 billion (Sh94bn) in wind power projects in Kenya and Tanzania.

Harith General Partners has committed to invest $70 million (Sh5.9 billion) in wind energy in Kenya and $500 million (Sh42 billion) across the African power sector through a new fund.

The Power Africa initiative comes at a time when Kenya’s Ministry of Energy and Petroleum has expressed its intention to rethink the electricity pricing formula with the aim of lowering monthly electricity bills to make the country a competitive destination for investors.

Speaking two weeks ago at a grant signing event between the Kenyan and the Japanese governments to aid exploration of geothermal energy, the Cabinet Secretary for Energy, Mr Davis Chirchir, said the government plans to half the price of electricity in the next three years.

“We must get the matrix of the power price right. This will involve revamping the distribution infrastructure to curb power losses and investment in renewable energy sources that will ensure cheap electricity is fed into the national grid,” said Mr Chirchir.
Consumers in Kenya pay between 17 and 18 US cents per unit of electricity, double what is charged in countries with sufficient power supply.

KenGen is undertaking development of a 280 megawatt geothermal power plant in Olkaria.

This is the single largest such project in the region, whose capacity could be extended to 560 megawatt once the first phase of construction is complete.

Less than 30 per cent of Kenya’s population has access to electricity, a situation that mirrors the case in sub-Saharan Africa, where more than two-thirds of the population lacks access to power.

The situation could get worse for Kenya, given that electricity distributor Kenya Power recently doubled its connection fees from Sh35,000 to Sh70,000, which is beyond the reach of most people and could lock out many from the grid.

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