Ideas for Kenya energy sector

August 27, 2010

, NAIROBI, Kenya, Aug 26 – The government has been urged to enter into joint ventures with the private sector to build necessary infrastructure that will enable the country to meet the growing demand for petroleum products in coming years.

Acting Head of Infrastructure and Economic Services Division at the Kenya Institute for Public Policy Research and Analysis Eric Aligula said the consumption of these products is expected to triple in the next two decades thus the need to ensure that the country is energy secure.

“The government has a major role to play in the financing of this infrastructure but the private sector has to also come in. So having Public Private Partnership arrangements that are efficient then becomes a key consideration,” he said.

Such policy measures would also have to take into consideration key development in the market including the discovery of oil, gas and related products in the East Africa region and continuing (oil) prospecting in Kenya as well.

“If you are expanding the pipeline, you should do so in a way that recognises that you may have to do reverse flows from Uganda to other parts of the country if we connect to their supply,” he said of the neigbouring country’s oil discovery which has now forced Kenya to re-look at its key expansion projects such as the Eldoret- Kampala line.

His remarks were in reference to new findings released by KIPPRA which shows that with the increased optimism in the country which might drive greater economic growth, demand will be at around 10billion Metric Tonnes (MT) by the year 2030. as at 2009 when the study was conducted, demand increased to 3.65billion MT up from 3.18 billion MT recorded in 2008.

The study also found out that Kenyans are sensitive to price with increments on fuel products such as automotive gas oil, kerosene and motor spirit premium immediately reflected on consumption.

“A policy analysis scenario of kerosene model shows that when there is a shock due to a 20 percent increase in domestic price of kerosene, its consumption will decline,” said the report. This sensitivity forces people to result to energy sources such as charcoal and kerosene that are expensive and have health implications.

KIPPRA thus called upon the government to aggressively drive the shift to cleaner energy by for example subsidising cooking gas cylinders and valves to make LPG more affordable to those in the lower income segment of the society.

“If you are able to take up the initial costs of these the cost of the ‘meko’, then it makes it easier for them to expend their Sh1000 or Sh1,200 they need for buy the cooking gas,” Dr Aligula said while referring to the recent move to distribute free energy saving bulbs, a move which was meant to save about 45 Megawatts.

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