Opinion & Analysis

EDITORIAL: We must plan properly for energy investments

Energy Secretary Charles Keter. FILE PHOTO | NMG
Energy Secretary Charles Keter. FILE PHOTO | NMG 

Kenya is reputed to be the largest economy in eastern Africa, a factor that has made it a favourite for international investors despite improving attraction of the other economies.

One area that has become a magnet for big bucks is the energy sector where regulations and a largely steadily growing economy have all helped create a conducive environment.

In the past one decade or so, billions have been poured into thermal, geothermal and wind projects helping cushion Kenyans against power outages seen in the early 2000s. However, there have been critics out there who believe we are building capacity too fast and we may end up repaying billions while stuck with power we don’t need at all or have no capacity to distribute.

A case in point is the 300 megawatt (MW) Turkana wind power project where the consumer is compensating investors to the tune of hundredsa of millions a month because the supplementary evacuation lines were not built on time.

To be sure, this was one of the concerns of the World Bank when they pulled out of the project years back, never mind the fact that they were simultaneously backing expensive thermal projects.

It is against this background that the pulling out of Swedish firm VR Holding AB from setting up a Sh253 billion wind plant in Malindi must be looked at.

It is instead investing in Tanzania, which together with other countries need more power.

While we have to question why the thermal plants, that cost billions in fuel imports, are still doing business in Kenya, we believe the Ministry of Energy has a point in being fidgety about taking the 600MW.

That is, if it is matter of absorptive capacity alone because we cannot excuse the setting up of a 900MW coal plant in nearby Lamu while rejecting clean power.

Going forward, we need proper planning and justification for energy investments to avoid bureaucratic rent seeking as well as losses to the public. At the same time, we need to liberalise the industry to allow investors to distribute own power to help reduce the risk to the public.

But we should only take power we need.