Geothermal Co. to be set up soon

November 22, 2008

, NAIROBI, November 22- The proposed Geothermal Development Company (GDC) will be set up in the next one month, the government has announced.

Energy Minister Kiraitu Murungi said on Friday that he would register the company together with the new National Electricity Transmission Company in the next 30 days.

“I have also directed that the exploitation of geothermal resources be fast-tracked so that the economy can begin to enjoy the benefits of cost-effective form of power generation sooner rather than later,” he emphasised.

The shift towards geothermal development stemmed from the realization that the country has huge potential for geothermal development. The Rift Valley area for example, has the potential to generate 4,000 Megawatts (MW).

This caused the government to allocate, in the current financial year Sh4billion for geothermal resource assessment and development.

The launch of the Transmission company means that the Kenya Power and Lighting Company will no longer be required to invest in new transmission lines and that they (the lines) will be financed through public funds.

The government has also allocated Sh750million to facilitate the formation of the transmission company.

“We are treating transmission (of electricity) as just any other infrastructural development. The main task of KPLC will be primarily in the distribution of power,” Mr Murungi explained.

It is however not clear what implications the unbundling of the utility firm will have on the firm’s profitability record. KPLC recorded a pre-tax profit of Sh2.73billion for the financial year ended June 2008 compared to Sh2.64billion recorded during the same period last year.

The minister however emphasised that the registration of the two companies would go a long way in ensuring efficient and cost effective delivery of power to Kenyans.

“The issue of high energy costs has been a concern not just to customers but to the government as well. Electricity is a fundamental input for the overall social and economic progress a country can hope to make,” Mr Murungi said while highlighting the various initiatives such as the review of taxes levied on electricity that they were undertaking to reduce the burden on the public.

He invited financiers to invest in the energy sector so as to reduce the high costs that impede economic development in the country.

“Investors should therefore take advantage of this emerging opportunity in the power sector to install mini hydros, wind and solar generators at appropriate sites in the country and inject power into the grid,” he said while pledging that such initiatives would be supported by investor-friendly regulation and good returns on investment.

He reiterated that on its part, the government was aggressively pursuing projects that were geared at enhancing power generation capacity to match and exceed growing demand.

For instance, they were plans to install ten generation projects which would produce 381 MW of electricity between now and 2011, Mr Murungi said.



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