The Baringo-based Cummins Cogeneration Kenya is set to start its first phase of power production in June after securing a power purchase agreement with Kenya Power.
The subsidiary of the US-based Cummins Limited is signing contracts with farmers to grow and supply Prosopis juliflora (known locally as Mathenge) weeks after Kenya Power offered to buy its power at its predetermined rates.
“We share the government’s vision of reducing cost of electricity but the contract that we have negotiated with the community is such that any future review of the feed-in tariffs will go straight to farmers.” Cummins (UK) CEO Rishi Chandra said on Tuesday during groundbreaking ceremony for the power plant’s construction.
The Power Purchase Agreement (PPA) was facilitated by the USAID under President Obama’s power Africa initiative which seeks to mobilise Sh85 billion to lower the cost of electricity in Kenya.
“The biomass plant represents new development approach that leverages public-private partnerships to deliver measurable results,” said USAID’s associate administrator Mark Feierstein.
Sh1.9 billion will spent in setting up the biomass plant on 15 acres in Marigat area of Baringo where the invasive Mathenge plant is widespread.
At full operation, the firm expects to produce 12MW of power to be connected to the national grid. The company estimates that each megawatt will take yields from more than 800 farmers meaning it has to contract at least 9,600 farmers in Baringo County.
“This is our first biomass project in sub-Saharan Africa and the first one that will benefit communities directly,” Mr Chandra said, contrasting the Baringo project with similar ventures elsewhere that has seen the company only signing big oil and gas companies.
On average, a farmer from the county is expected to earn about Sh80,000 per year from Mathenge tree over the 20 years the company will be operating in the region. In addition, a total of 2,500 workers will be hired directly by the company to run its operations, the executives said.
Mr Chandra said the company would be using biomass gasification method that converts the supplied mathenge plant into electricity, waste heat and residual char.
The market for electricity has been secured at Kenya Power but the company still has to find market for waste heat in the country’s agricultural sector and residual char, which is usually used as water filtration medium or as fertiliser.
The company hopes to generate a revenue stream of about Sh680 million each year with electricity generating the bulk with charcoal, carbon credits and cold storage space generating additional Sh170 million.
‘Mathenge’ was introduced in arid and semi-arid lands in the early 1980s to fight desertification but soon took up vast swathes of land.
It became a subject of national debate six years ago after members of the Ilchamus community from Baringo dragged a toothless goat to High Court to seek compensation from government, saying the weed was destroying their source of livelihood.
The court declared the weed as “obnoxious” and ordered its destruction, something that most community members did by turning it into charcoal.
On Tuesday, county leaders welcomed the electricity generation project , saying it could help them to make economic sense of the plant that has caused them trouble.
“We welcome the venture but the company must subject community members to best labour practices,” said Baringo governor Benjamin Cheboi.