Why consumers will continue paying more for power

The Kenya Electricity Generating Company (KenGen) is for the second time in a row seeking an extension from the regulator to continue feeding the grid with Aggreko’s costly emergency power due to delays in setting up a replacement plant. PHOTO | FILE

The Kenya Electricity Generating Company (KenGen) is for the second time in a row seeking an extension from the regulator to continue feeding the grid with Aggreko’s costly emergency power due to delays in setting up a replacement plant.

KenGen, which manages Aggreko’s power plants in Kenya, has written to the energy sector regulator asking a one-month delay to complete installing a 30-megawatt gas turbine in Muhoroni, Kisumu, meant to replace the existing temporary power plant.

The Energy Regulatory Commission (ERC) says it has renewed Aggreko’s contract which lapsed on June 14 — having been earlier extended by a month — after KenGen reported technical glitches during testing of the diesel-fired generator.

“KenGen wrote to us saying the gas turbine had problems with vibrations and asked for one month to sort out the issue,” said Joseph Oketch, director of electricity at ERC, referring to the letter dated June 14, 2016.

“We want Aggreko out of the system, but because of the low-voltage issue in western Kenya we approved the request,” said Mr Oketch in an interview with the Business Daily.

KenGen, which is spending $4.3 million (Sh430) to move and install the 30-megawatt thermal generator to Muhoroni from Embakasi in Nairobi, first sought an extension in May blaming logistical hitches and heavy rains for the delay.

Emergency power is priced as high as ¢50 per kilowatt-hour, which is more than double the cost of diesel-fired electricity set at ¢20 per kWh.

The delay in unplugging the Aggreko Muhoroni plant means that electricity consumers will continue to bear a heavy cost burden given all households and manufacturers share the burden of emergency power in their bills.

KenGen managing director Albert Mugo declined to speak to the Business Daily on the continued delay to switch-off Aggreko’s pricey power from the grid.

The State-owned electricity generator has earned more than Sh889 million for managing Aggreko’s expensive emergency power projects over the past decade, official data shows.

Switching off the Muhoroni Aggreko emergency power plant means the British company will only have the 3.4-megawattGarissa temporary generator.

Kenya Power’s uptake of Aggreko’s expensive temporary power nearly doubled in March to 5.79 million kWh from 3.17 million units in February, despite the stability of steam power, and heavy rains experienced in the third month of the year.

Aggreko has pocketed Sh10.9 billion in electricity sales from supplying Kenya with temporary power over the last decade, underlining the lucrative nature of the deal.