Kenya Forest Service director David Mbugua: Development of wind farms for wind energy generation in Ngong Hills forest is a key non consumptive use that KFC is embarking on. Photo/FILE
Kenya’s forestry sector, battling to conserve the environment, is gunning for a piece of the lucrative electricity market in an effort to grow its revenue in tough economic times.
Kenya Forest Service (KFS) draws the bulk of its income from donors and the government, but these sources are not adequate to support its conservation efforts.
As a result, the state owned firm is looking at diversifying its income streams with the intention of growing its revenues to Sh1 billion by the end of this year having posted Sh550 million in June 2009.
Already, KFS is opening its forest reserves to ecotourism by partnering with private investors to set up facilities for bird watching, trekking and water-rafting besides boosting its industrial forest cover aimed at supplying the market with timber products.
Last week, it invited bidders to build wind mills at Ngong Hills with the intention of injecting the generated electricity into the national grid.
KFS will share the proceeds from the revenues generated from selling the electricity to Kenya Power and Lighting Company (KPLC) on the strength that it’s a land owner — a move that will indirectly allow it tap into the multi billion shilling power sector.
“Development of wind farms for wind energy generation in Ngong Hills forest is a key non consumptive use that KFC is embarking on,” said David Mbugua, a director at KFS.
The private power producers have steeped up their activity in the local supply market in recent months as Kenya emerged as a ripe business opportunity.
The private operators led by Aggreko, Iberafrica and OrPower 4 have raced to fill the power generation gap left by KenGen, whose market share has been whittled by 21 per cent to 48 per cent as the State-owned firm is heavy on hydro power.
This saw the private operators earn Sh6.2 billion from KPLC — a piece of which KFC is eyeing as it seeks to increase in presence in the forest conservation front.
Player in the power sector say that private equity investors are expected to show increased interest in the KFS deal at a time when lower investments by the government in building new power plants is opening a fertile business opportunity for private capital.
Investments in the local power sector are emerging as a high-return business.
The country aims at adding 800 megawatts of electricity to the national grid in the next five years at cost of Sh111 billion, but the government and power generator KenGen say it can only meet part of cost with balance being met by private investors.
Unsolicited inquiries
“We are receiving a number of unsolicited enquiries from a wide range of investors and KFS tenders will definitely generate interest,” says Joseph Njoroge, the managing director of KPLC.
This will mark the second major wind power project after Aldwych International kicks off construction of a 300 megawatts Lake Turkana Wind Power project.
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