NAIROBI, October 7 – The government has announced plans to establish geothermal generation and power transmission companies to ease the current strained electricity supply in the country.
Energy Minister Kiraitu Murungi said the two companies, which should be in place by next year, would generally assist in easing the cost burden on consumers.
“The government has set aside Sh4.5 billion and Sh50 million respectively for each of the projects,” Mr Murungi said at the opening of the National Energy Conference on Tuesday.
“One of the major challenges in geothermal development is very high exploration costs and investors are not willing to spen in exploration because it is a very uncertain business; you may spend a lot of money but you don’t find steam,” he said, adding; “What this company will do is take up this risk and then advise both public and private investors on how to go about it.”
Mr Murungi explained that the government wanted to remove the cost of construction of transmission lines from Kenya Power and Lighting Company and also from the end consumer by creating the new power transmission firm to be known as Kenya Electricity Transmission Company.
“We want the government to construct transmission lines the way it constructs roads because energy is part of the infrastructure for the development of this country,” he said.
Currently, the country has an electricity capacity of 1,215 megawatts, compared to the peak demand of 1,150 megawatts, leaving a reserve capacity of less than the 15 percent recommended international average.
“The current low quality of electricity supply throughout the country is largely due to neglect and stagnation in upgrade and expansion of the transmission grid,\’\’ Mr Murungi said.
As a result, he said, Sh32 billion will be spent in constructing 2,300 kilometers of 132 KV power lines across the country by 2015.
A higher voltage 400 KV line will be built between Nairobi and Mombasa, at a cost of Sh18 billion. Another 400 KV line will be built northwards to import electricity from Ethiopia, at a cost of Sh29 billion.
“Construction of transmission lines cannot be funded through tariff increases,\’\’ said the Minister. “It has to be funded by the government through its infrastructure budget.”
Once established, Kenya\’s geothermal company will exploit the country\’s estimated reserves of 7,000 MW. Only 130 MW of this potential is currently being captured, Mr Murungi said.
Meanwhile Mr Murungi revealed that he had asked the Electricity Regulatory Commission to advise him on introducing modalities of introducing price controls for oil.
“Currently there is a team in Ghana trying to investigate how the country introduced price controls in their fuel industry without upsetting market fundamentals,” he said.
The minister could however not commit on the exact timeline within which the price controls will be introduced.