Kenya Power and Lighting Company is mulling establishing a transformer manufacturing plant in Kenya to help the country meet the growing demand for power and diversify its earnings.
The power distributor yesterday invited bids for viability study as it seeks to establish a plant that will not only meet it needs, but also serve the Uganda, Tanzania, Rwanda and Burundi markets that currently buy transformers from China, India and South Africa.
Joseph Njoroge, the managing director of KPLC, said the establishment of the plant has been informed by the soaring demand for transformer equipment because of increased connections and rising cases of vandalism.
“We are currently using 2,000 transformers per year from less than 1,000 units two years ago,” said Mr Njoroge.
“We have been forced to wait up to nine months for transformers from our suppliers in Europe and Asia. We need our own plant to achieve flexibility and meet demand in time.”
The firm spent in excess of Sh1 billion in transformer equipment last year with replacements due to vandalism accounting for a third of the expense.
In the past, copper windings and electricity cables were main targets for vandals, but the focus has since shifted to transformer oil, after KPLC successfully lobbied to the government to ban the export of scrap metal in 2008.
Carbon trading
“Like any other business, we are always in the lookout for new income streams and this plant, if found viable, is part of this drive,” said Mr Njoroge.
The transformer plant will step up KPLC’s diversification drive that has seen it enter the telecom sector by leasing excess Internet capacity from its fibre optic cables besides entering the carbon trading market.
It will be the first transformer plant in the East Africa region and it would follow in the footsteps of Egypt, South Africa and Nigeria that have similar plants.
KPLC on Tuesday said it expects a sharp increase in demand for transformer equipment in Kenya as it moves to rope in more Kenyans to the national grid, especially in rural areas.
It has doubled its yearly connections pushing its customer base to 1.5 million last year from 800, 000 in 2007.
KPLC estimates less than 20 percent of Kenya’s population is wired up to the grid with less than five per cent of the rural dwellers connected to the national electricity grid.
“The Government of Kenya has a goal to accelerate the access rate by 20 per cent of the rural population by 2010 and to at least 40 per cent by 2020,” KPLC said in a press notice. “This growth rate will see an increase in the number of transformers required by KPLC.”
Kenya suffers regular power failure owing to insufficient electricity generation capacity and a dilapidated transmission network, which the World Bank estimates is shaving about 1.5 per cent of the country’s GDP.
Expand network
KPLC estimates less than 20 per cent of Kenya’s population is wired up to the grid with less than five per cent of the rural dwellers connected to the national electricity grid.
The company plans to upgrade and expand its network over the next four years at a cost of about Sh40 billion.
KPLC last month raised Sh9.8 billion in a rights issue aimed at upgrading the national grid and has announced plans to seek soft financing or turn to the bond market for additional cash.
The firm announced a 15.6 per cent increase in profits to Sh3.7 billion in 2010 on revenues of Sh39.1 billion, compared to Sh36.4 billion in the previous year.
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