Kenya turns to US in overhaul of energy policy

Kenya is wooing Americans to put more money and technical expertise in its energy sector as economic planners search for additional power to satisfy growing demand.

Just days after US pledged to inject Sh26 billion into geothermal generation, government officials lobbied President Obama’s top advisers for technical assistance in crafting a detailed energy policy.

“It is not aid or grants that we are interested in. We have huge demand for power.

We’ll pay for every unit generated,” Energy minister Kiraitu Murungi said on Wednesday shortly after a closed door meeting with the US delegation.

Kenya, which generates about 1,400 megawatts of electricity, has projected peak demand to grow phenomenally over the next 18 years as most of the flagship projects of Vision 2030 come to life. The manufacturing sector alone consumes more than 60 per cent of total energy generation.

At the Vision 2030 Secretariat, officials estimate that flagship projects which include seaports, resort cities and manufacturing concerns will require an estimated 42,700 megawatts of electricity from all sources.

Investors such as those being sought from US are expected to raise current generation capacity by another 500 megawatts in the next three years.

Through imports and domestic investments in power generation, Kenya hopes to raise enough power for long term development projects.

The latest Doing Business report compiled by World Bank on countries’ friendliness to business ranks access to electricity in Kenya at position 115 of 183 economies. The index is based on the cost and length of time it takes to get connected.

It takes 163 days and costs 1419.3 per cent of income per capita to access electricity in Kenya compared to Africa’s best — Mauritius — where it takes just 91 days and costs 328.5 of per capita income to access the utility.

Being an important component of production, inconveniences and costs of energy directly raise prices of locally manufactured products, dimming their prospects in markets. Local industrialists want the government to pay attention to domestic investors as well.

“The government needs to incentivise private sector to invest in least cost energy sources such as geothermal and other renewables,” the Kenya Association of Manufacturers (KMA) says in the Industrial Business Agenda released two weeks ago.

Parliamentary Energy Committee chairman James Rege said Kenya was also seeking technical support of the US government in developing policies and laws that would govern management of resources like oil in Turkana.

Such a policy would guide revenue sharing, block exploitation by financially muscled explorers and minimise conflict with communities in oil and coal-rich regions.

“International investors interests need to be protected by law but revenue generated must also be shared equitably,” Mr Rege said.

The energy policy will also incorporate recently discovered oil and coal in the national energy mix and guide how they would be shared among various sectors.

“It is prudent that any energy policies that are proposed must be aligned to industrialisation policies as well as Kenya’s Vision 2030 if we are ever to unlock our over dependence on imported goods,” the KMA stated in its agenda paper.

omondi@ke.nationmedia.com