August 29, 2009
One of the losing bidders in the just concluded public tender to produce emergency power is keen to develop geothermal energy near Naivasha. Muringa Holdings, a local energy consortium, has sent an expression of interest to KenGen and the Ministry of Energy to generate about 120 MWs next to the area where Aggreko has been given the nod to set up an emergency power station, amidst the raging power crisis.Last week, Aggreko, a UK firm, won a public tender to inject 60 mw into the national grid by the end of October. Mr Gursharm Brar, Muringa's managing director, said the company owns about 100 hectares of land in a parcel of land adjacent to the plot on which Aggreko will set up its thermal plants to be powered by ordinary diesel. Muringa has applied for a 20-year concession and is partnering with Capital Turbines Equipment.
Mr Brar said Muringa is also exploring the possibility of producing a 600 mw coal fired power station in Mombasa which will be supported by a 500 kv transmission line from the coastal city to Nairobi. Presently, Muringa, which supplies poles to the national power distributor KPLC, says it is exploring ways of evolving into a fully-fledged energy company by exploiting the opportunities for geothermal power production.
Under the East African Power Pool that will be mandated with developing a power market in the region, Kenya seeks to tap into its rich geothermal potential while Uganda will focus on hydropower as Tanzania concentrates on gas. Already, Muringa says it has requested to be licensed as an independent power producer (IPP) by the Energy Regulatory Commission (ERC).
Muringa's entry into the fray will break the dominance of Aggreko whose current and planned capacity will account for one third of the total national interconnected capacity. Currently, Aggreko sells power to the KPLC at Sh17.72 per kW hour of power. Its plants are powered by ordinary diesel while the Rabai Power Plant expected in October will be sell at Sh14.27 per kW hour. Geothermal power goes for Sh4.50 while hydro is cheapest at Sh2.50 for every unit of power bought by the KPLC.
Building an emergency power station is expensive, estimated at $15 billion while an IPP requires only Sh1 billion. Emergency power production is usually commissioned for a short period despite the high capital outlay, making the undertaking risky because it is only required in case of emergencies. The Energy ministry is fronting for public-private initiatives for its programmes on rural electrification and geothermal steam development under the Geothermal Development Company (GDC) whose role is to accelerate geothermal power development.
It is also seeking the development of power transmission highways to allow for open access under the newly formed Kenya Electricity Transmission Company (Ketraco), granting the private sector a key role in power generation and distribution. "Private sector investments will be recovered through stable and predictable cost reflective regimes executed by the ERC.
Power buying deals that are negotiated between prospective investors and KPLC are paid for by the parastatal and by extension, the consumers. Industry regulator - ERC however, says there is need to avoid over capacity that would be very expensive to maintain. Capacity additions should therefore closely mirror economic growth prospects.
Transmission lines
The Government –through Ketraco also hopes to build various high voltage transmission lines to strengthen the network in rural areas in order to reduce system losses. The energy from the plants will need to be evacuated to demand centres using either existing or transmission lines to be developed by Ketraco.
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