Sasini plans hydro power plant to cut electricity expenses

Sasini Ltd plans to set up a mini-hydro-electric power plant to run its coffee milling factories in Ruiru to cut operating costs.

The listed producer of coffee, tea and other agricultural commodities yesterday announced a tender for the supply of hydro-electric power generation equipment to be set up at its Ruiru Mills estate.

The company has hired Devki Energy Consultants to help in procurement of electro-mechanical equipment for the micro-hydro electric power generation project.

Sasini managing director Caesar Mwangi said high energy costs have made it difficult for the firm’s exports, especially coffee, to compete in the international markets.

“We cannot pass on the high cost of power to the international consumers because we will lose that market, it is just a reaction to high energy costs,” said Mr Mwangi. He said details of the cost and capacity of the power project would only be known at a later stage.

The company which relies on diesel to power its milling plants was last year affected by high fuel costs as diesel prices increased 21 per cent between January to December last year.

The price of diesel increased by Sh19 a litre to Sh107 in the 12 months to December 2011 pushing up the cost of running generators.

The proportion of hydroelectric power in the national electricity grid was also negatively affected by rain shortfall, further adding pressure to the cost of energy due to the increased reliance on diesel-run independent power producers.

The company said in its financial statement for the year 2011 that it was awarded part of the funding by the Energy and Environment Partnership Programme (EEP Programme) for development of the power project.

The EEP Programme is an initiative funded by the governments of Finland and Austria and hosted by the Development Bank of South Africa focusing on poverty alleviation.

Sasini’s net profit dropped 19 per cent in the second half of last year to Sh160 million on high cost of production.

Coffee prices having been undergoing a correction in the international markets after hitting a record high last year, and are likely to affect the company’s revenues.

High costs of power has seen even agricultural regulators such as Kenya Tea Development Authority move to set up their own mini-hydro power plants to improve the competitiveness of their products.