Kenya’s 5,000MW power plans crucial for economic take-off

The 5,000-megawatt power project launched over a year ago has on occasions elicited mixed reactions.

Some economists have argued that Kenya has no capacity to absorb 5,000 megawatts of new power, and that the carried idle capacity shall make future power more expensive.

I guess it all boils down to how one views the ongoing socio-economic development agenda. One cannot plan for development and fail to provide sufficient energy to drive it. Electricity has to be there by the time projects and programmes commence.

The project’s skeptics appear to incorrectly extrapolate the past economic performance and power demands into the future.

The economic baseline they use is unrealistic because historical growth was mostly stunted and indeed severely restricted by years of missed development opportunities.

Had the poor governance of 1980-90s not interrupted the economic trends of 1970s, Kenya would by now be consuming power far in excess of 5,000 megawatts.

It is the current and future economic potential that we should be focusing on, and enough electricity to match it.

There is an obvious socio-economic development “catch-up” that has to be undertaken by Kenya to accelerate service, jobs and wealth delivery.

The 10 years of Kibaki government appropriately re-established systems and capacity on which Kenya could make quick economic recovery. It is on this take-off that the Jubilee team is busy building social and economic infrastructure capacity, which includes sufficient power supply.

There are new, large public and private projects that will be queuing to absorb the additional power supplies. There are also the existing industries that will be scaling up production if power prices are sufficiently low.

Further, one cannot fail to notice enormous and elaborate commercial and residential property developments in the larger Nairobi metropolis and other towns. They will require increased electricity supply.

But my main interest here is the huge “dormant and suppressed” electricity demand that can only be stimulated by availability and accessibility of reasonably priced power.

This mainly involves previously un-prioritised and forgotten areas which include informal sectors, rural and peri-urban regions. Take the electricity there and new power demands will pop up.

With the county governments, most of this latent electricity demand will be realised, and it is already happening. Recently we saw Murang’a establish numerous milk cooling and marketing depots.

The mere presence of electricity at these depots will stimulate more electricity demands in the vicinity. And this is exactly what will happen when ‘laptop’ grid electricity goes to primary schools.

The other day we witnessed the other fraction of “forgotten” electricity demands when the National Youth Service landed in Kibera.

There is social obligation to provide some basic minimum of power supply to the marginalised areas like slums. Public street lighting and security go together, and there is a lot of catching up to be done in this regard. Further, SMEs spring up in informal areas when power is made available.

The power generation plan was launched on basis of three key metrics. The 5,000 megawatts new capacity, reduced average generation cost to 7.41 US cents and a 40 months completion deadline.

Of the three deliverables, it is the unit cost that is most crucial. It is the most closely watched and monitored metric through the resultant monthly power bills.

It is the reduced tariffs that will trigger more demands and protect existing ones. The incremental 5,000 megawatts should always be viewed, understood, and accepted as a means towards reduced power supply costs.

The target average unit electricity cost is a function of generation mix that is ultimately delivered. From the information we are getting, it is evident that geothermal delivers the lowest costs.

This implies that it is the energy of choice to be maximised at every available opportunity. For any generation project within the 5,000 megawatts plan that does not make it, or is delayed, geothermal should be the preferred replacement.

I also believe there will be no problem achieving most of the wind power objectives since the key projects had already achieved some level of financial commitments and closures.

However, it is the 960-megawatt Lamu coal projects that will make the largest capacity contribution, if the developers can quickly get the procurement wrangles sorted out.

The Mombasa LNG power plant looks still-born, while the anticipated replacement by a natural gas power plant in North-Eastern can only actualise when African Oil confirms commercial gas finds.

If in 40 months the ministry commissions 50 per cent of the 5,000 megawatts plus 25 per cent of it as work in progress and 25 per cent in financially committed projects, this would be a great achievement.

Those who are familiar with the electricity supply woes of Nigeria will appreciate the need for a national power development master plan that is implementable, provides sufficient electricity at all times and offers tariffs that are comparable with low energy cost nations.

I believe that the 5,000-megawatt plan for Kenya is headed towards achieving these objectives.

Mr Wachira is the director Petroleum Focus Consultants. Email: [email protected].