Mr Dan Ameyo, Mumias Sugar chairman, says the firm is in talks with Kenya Power to raise electricity tariffs. PHOTO | FILE
What you need to know:
Mumias Sugar needs to make a formal application for review of the ¢6 per kilowatt hour it currently receives.
The miller has been pushing for a review of the 10-year power purchase agreement it signed on May 15, 2008 to match the prices offered by Kenya’s feed-in tariff (FiT ) policy adopted in 2008.
Mumias Sugar has a chance to submit its application for a raise in tariff for its wholesale electricity sales to Kenya Power, opening a window for the cash-strapped miller to boost earnings from its power generation business.
The Energy Regulatory Commission says Mumias needs to make a formal application for review of the ¢6 per kilowatt hour it currently receives, which is nearly half the preset tariff of ¢10 per kWh payable on biomass-generated electricity.
The loss-making Mumias Sugar has been pushing for a review of the 10-year power purchase agreement it signed on May 15, 2008 to match the prices offered by Kenya’s feed-in tariff (FiT ) policy adopted in 2008.
Mumias Sugar chairman Dan Ameyo said the firm was already in talks with Kenya Power to raise its electricity tariffs to match those prescribed by the FiT policy.
ERC director-general Joe Ng’ang’a said Mumias’ petition will be analysed by a technical committee comprising of officials from the Energy ministry, the regulator, Kenya Power and other energy stakeholders.
“The window is open. However, Mumias needs to make the expression of interest (EOI) to the Feed-in Tariff committee for consideration,” said Mr Ng’ang’a in an interview.
Kenya’s dollar-denominated feed-in tariff allows power producers to sell renewable energy – wind power, biomass, small hydro, solar, biogas and geothermal-generated electricity – to Kenya Power at a pre-determined tariff.
Mumias switched on its 38 megawatts co-generation plant in May 2009. The project uses bagasse – a byproduct of sugar cane processing – to generate electricity.
The project, which includes a 30-kilometre transmission line and sub-stations, was funded through a $35 million loan from French development financial institution Proparco.
The struggling miller consumes 12MW to run factory operations and exports 26MW of electricity to the national grid.
The energy industry regulator’s nod to tariff review comes at a time when Mumias’ earnings from electricity sale dropped to an all-time low of Sh59 million in the period to June compared to Sh230 million a year earlier.
Mumias sold 14,451 megawatt hours of power to the grid down from 55,935 MWh exported as at June 2014.
The dismal earnings from the co-generation plant were blamed on erratic flow of bagasse linked to frequent factory breakdowns, poor cane supply and a prolonged shutdown of the miller for repairs.
The power purchasing agreement signed with Kenya Power demands that Mumias generates electricity 85 per cent of the time, a feat the run-down miller has struggled to achieve. This has led to hefty penalties and disputes between the two firms.
The miller raked in Sh378 million from the co-generation plant in June 2010 – its first full-year of operation. Electricity sales peaked at Sh586 million in 2012.
“Due to the integrated nature of the plant set-up, the other business segments were also adversely affected by the poor sugar segment performance,” Mumias said when releasing its full-year results a fortnight ago.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
