The two companies have revised the terms of engagement and scrapped some of the punitive clauses that saw Mumias slapped with huge fines for failure to supply to the national grid.
Under the new terms, Mumias will only be paid for power generated and sold to the grid.
Mumias will be selling to Kenya Power at six US cents (Sh7) per kilowatt-hour, but the firm says it is still negotiating for an increase.
Mumias Sugar Company #ticker:MSC will resume supplying electricity to Kenya Power #ticker:KPLC after a three-year hiatus triggered by a dispute over the power purchase agreement (PPA).
Chief executive officer Nashion Aseka says the two have revised the terms of engagement and scrapped some of the punitive clauses that saw Mumias slapped with huge fines for failure to supply to the national grid.
Under the new terms, Mumias will only be paid for power generated and sold to the grid.
“We have now agreed the new terms and we shall be selling extra electricity to Kenya Power in the coming few weeks,” said Mr Aseka.
“There will be no issue of penalties anymore,” he added. Mumias cogeneration plant has a capacity of 36 megawatts and intends to export 10 to 15 megawatts and use 12 megawatts internally.
The miller will not produce all the 36 megawatts for lack of enough bagasse, which is the main raw material for production of electricity. Cane supply remains low.
Mumias will be selling to Kenya Power at six US cents (Sh7) per kilowatt-hour, but the firm says it is still negotiating for an increase.
At Sh7 per unit, Mumias power is in the same tariff range as geothermal, and three times cheaper than diesel generated electricity.
The firm had entered into an agreement with Kenya Power to supply 25 per cent of the power.
Under the PPA Power, Mumias was supposed to supply the amount without failure.
However, the miller defaulted severally due to numerous stoppages and lack of bagasse, a move that saw the firm slapped with huge fines and disconnected from the national grid, subjecting it to expensive diesel power.
The miller buys electricity from the power firm to jump-start its machines and bridge periodical deficits.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
