Kenya power demand to cost Sh350b

May 12, 2009

, NAIROBI, Kenya, May 12 – The Kenya Electricity Generating Company (KenGen) has said it requires a total of Sh350 billion over the next ten years to invest in various projects meant to stabilise power supply in the country.

KenGen Managing Director Eddy Njoroge told a media briefing on Tuesday that the funds would be used to invest in an additional 2,000 Megawatts (MW) of electricity which would be needed to meet power demand which is expected to soar by approximately 160 percent by 2018.

“The average cost per Megawatt is between $2.2 million and $2.5 million depending on what you are putting up and therefore the total cash requirement for KenGen or the country for expanding our generation capacity is $4.5 billion,” he said.

This translates into an annual requirement of Sh35 billion if the country is going to meet the objectives outlined in development blueprint, Vision 2030.

Currently, without factoring the 150MW emergency power, peak demand has outstripped supply at 1070MW against an installed capacity of 1248MW. It is believed that by 2018, it will be at about 2,800MW inclusive of a 15 percent reserve margin.

“Without emergency (power) we can barely meet our demand,” he cautioned of the demand that is estimated to be growing at an average of eight percent per year due to the economic upturn.

The projects to be carried out will be divided into three phases, with the first being Horizon 1 which in the next five years is expected to see a timely delivery of ongoing projects and improve efficiency to boost supply. The upgrading of the Kiambere Dam and Ngong Wind farm, Tana re-development among others should inject an extra 538MW and are estimated to cost $1.6billion.

Horizon 2 represents projects such as the establishment of a 300MW coal plant slated between 2013 and 2018 which aim to create sustainable power, grow supply ahead of demand in order to establish reserve margin and optimise project portfolio.

The third phase which would be beyond 2018 should see KenGen exploring expansion opportunities in and across the continent and become a leader in technology and innovation.

The company, Mr Njoroge said was exploring various options of raising the funds including the ongoing Public Infrastructure Bond Offer (PBO) which is yet to receive the green light from the Capital Markets Authority.

At the briefing, Mr Njoroge who declined to comment on the bond, through which KenGen is looking to raise Sh15 billion, expressed confidence that the offer would be successful despite the bearish run at the capital markets.

“We feel that this is the direction we should be going because it is much better to raise capital locally. In the long run, we will not suffer currency fluctuations and this can only be good for consumers,” he explained.

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