Economy

Private firms to run five power transmission lines

electr

A Kenya Electricity Transmission Company Limited (KETRACO) Substation. FILE PHOTO | AYUB MUIYURO | NMG

At least five electricity transmission lines will soon be run by private investors as the government advances with its plan to operate part of the grid system under a Public-Private Partnership (PPP) framework.

The Ministry of Energy now says it is at the advanced stages of reviewing two proposals from private investors, that will see the five lines surrendered at the operational level.

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Currently, all transmission lines in Kenya are funded by the Exchequer or by donors through on-lent funds.

Energy Principal Secretary Alex Wachira on Thursday said the ministry had reviewed the two proposals and provided feedback to the investors, and was waiting for their response.

“We are currently evaluating two proposals of about five transmission lines that will be done under the PPP framework. We have given the investors the feedback after reviewing their proposals and we are looking forward to the investors returning to us with the recommendations that we have made for us to make progress and we do the first transmission lines under PPP,” Mr Wachira said.

The PS noted that the government was resorting to the PPP framework due to funding challenges, with “a shrinking headroom in terms of financing through the exchequer, and more so, borrowed financing of energy projects.”

He also indicated that the government was looking into monetising some of the transmission lines as a way to provide the Kenya Electricity Transmission Company (Ketraco) extra cash and wean it off exchequer funding.

“We are looking into monetising some of the transmission lines so that Ketraco can get some cash to do more transmission lines and that we are looking into the legislation part of it and we are in consultation with the Attorney-General and at the appropriate time when we get concurrence, we should be able to monetise some of the transmission lines to be able to bring cash injection into Ketraco,” he said.

Parliament in June asked the Energy ministry and the Treasury to change tack and build some three power transmission lines under PPP to ease pressure on the Exchequer.

The three are the Loiyangalani-Marsabit, Marsabit-Isiolo and Gilgil-Thika-Konza lines, each with a capacity of 400 kilovolts (KV) whose construction had been planned to be funded through loans.

The change is meant to ease pressure on the Treasury, which is grappling with high debt servicing and reduce the loans build-up.

The proposal by Parliament, if adopted, will see the government pay the investors through an annuity or the funds being recouped through the electricity tariffs or both.

“The PPP framework should clearly state the measures put in place to manage the associated risks and contingent liabilities,” the Budget and Appropriations Committee (BAC) said in a report on the upcoming Budget.

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Mr Wachira spoke in a press briefing following the KenGen AGM, where shareholders approved a dividend of Sh0.3 per share for year ended June.

KenGen made a Sh5.02 billion profit during the year which was a 48 percent increase from the profit reported in 2022, and the Sh0.3 dividends per share was a 50 percent increase.

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