Kenya Tea Development Agency (KTDA) has inked a deal with Kenya Power Company #ticker:KPLC to sell them electricity from the tea agency’s small hydro projects.
The agency and the utility firm signed a power purchase agreement last week that will see the KTDA sell extra power and earn an estimated $7 million (Sh700 million) annually.
The deal, according to KTDA Power general manager Lucas Maina will see the agency sell about 10.8 megawatts from seven of its hydro projects to Kenya Power, which will pay between Sh9 and Sh10 per kilowatt hour.
The mini-hydros from seven plants is expected to generate 20 megawatts leaving the KTDA with surplus power for the national grid.
“This deal allows us to sell up to 50 per cent of the generated electricity to Kenya Power and it comes as a major boost to our earnings,” said Mr Maina.
Currently, the KTDA has three running plants with the rest set to be completed in the first quarter of next year.
The agency has 18 hydro projects expected to generate 40 megawatts on completion.
Mr Maina said the deal will only see the KTDA sell electricity to Kenya Power with no penalties for default.
“The agreement is in such a way that we only sell when there is excess. When we do not have a surplus, then we are not under obligation to supply,” he said.
Previous power purchasing agreements between Mumias and Kenya Power turned sour when the sugar firm was slapped with huge penalties for defaulting on supplies.
The KTDA is banking on the projects to cut annual power payments to Kenya Power of Sh800 million.
The agency last year signed a Sh5.5 billion syndicated loan to fund the construction of seven small hydro-dams.
Construction of KTDA’s three hydropower projects in Gura, Chania and North Mathioya was funded by an earlier credit line from French Agency for Development.