The Senate has proposed that power plants supplying electricity to Kenya Power switch to using liquefied natural gas (LNG) instead of oil to generate electricity by 2026, in the latest bid to tame runaway power bills.
A report tabled before the Senate and which is set to be adopted by the House shows that thermal plants have between 18 to 36 months to drop the use of Heavy Fuel Oil (HFO), in a move aimed at cutting the Fuel Cost Charge (FCC).
FCC is the single biggest item in customer bills and is used to compensate thermal power generating plants for the HFO they use to power their plants and generate electricity.
High prices of petroleum products, coupled with increased tapping of the plants by Kenya Power, have driven up FCC in recent months, resulting in high power bills that hurt consumers.
Lawmakers say the use of LNG is provided for in the Power Purchase Agreements(PPAs) that thermal power plants signed with Kenya Power. But lack of infrastructure for the importation of LNG looks set to derail the implementation of the directive in the next three years.
“The committee recommends that thermal power plants should convert from HFO to LNG in accordance with their respective PPAs within 18 to 36 months,” the energy committee says.
Kenya Power has contracted 11 thermal power plants and one of them -Muhoroni Gas Turbine which is owned by KenGen— supplies the costliest electricity at Sh56.73 for every unit. Iberafrica Power, which sells a unit for Sh28.24 comes second, followed by Rabai Power at Sh24.04 a unit. All these are thermal plants.
The cheapest power is from KenGen’s geothermal plants at Sh4.71 a unit, highlighting the huge pricing variance attributed to the use of heavy fuel by thermal plants.
The Energy and Petroleum Regulatory Authority Director General, Daniel Kiptoo supports a shift to LNG, but says that the transition period given by the lawmakers is short.
The energy regulator says that the three-year deadline might not be realistic given a raft of hurdles, mainly lack of infrastructure to allow the importation of LNG. and may not be realistic.
“The conversion to LNG has always been in the plan but has never been actualised… It definitely cannot be in 18-36 months,” Mr Kiptoo told Business Daily.
The PPAs validity ranges between 20 to 25 years, showing why continued use of HFO is a key hurdle to the State’s efforts of lowering electricity prices and easing pressure on households and easing the cost of doing business.