A Review of the Nigerian Energy Industry

Kenya scrutinises cost of 5,400mw project

Electric-power-plant23 November 2013, Nairobi – The Kenyan Energy Regulatory Commission will scrutinise all funding options for the ambitious mega-billion 5,000 plus megawatt project to ensure their cost will not push up the cost of electricity.

Director general Fredrick Nyang said hundreds of billions to be spend in adding 5,400MW of electricity on the national grid by December 2016 should be acquired at affordable rates.

Kenya Power and Kenya Electricity Generating Company have announced plans to separately mobilise Sh631.75 billion to realise the project that runs from September 2013 to December 2016, according to energy cabinet secretary Davis Chirchir.

KenGen will be seeking Sh475.75 billion($5.5 billion) to generate an additional 2,500MW-half of government target-while Kenya Power wants Sh156 billion($1.8 billion) to enhance its electricity distribution network. Independent power producers are also expected to generate the other half of the targeted capacity.

Ministry of energy is evaluating bids from 22 companies including largest listed investment firm, Centum, for separate coal and gas powered plants at Lamu and Mombasa, respectively, in an international tender floated on October 2.

Acquiring fund at affordable rates, Nyang said in an interview, will ensure the cost of producing power is in line with Jubilee administration’s policy of “reducing electricity tariff and increasing installed capacity of cheap energy sources”.

“The rates will still be determined by the market but we will look at their variation from benchmarks like Libor and similar issues done in those markets previously to ensure the margin is not very wide,” he said.

KenGen’s acting chief executive Simon Ngure said on October 30 Sh142.72 billion($1.65 billion) will be raised through a rights issue with the remainder Sh333.02 billion($3.85 billion) coming from domestic and international debt facilities.

Kenya Power’s chief financial manager Lawrence Yego said on October 11 negotiations with various bilateral and development partners were still at a “very early stage”.

He however indicated negotiations with the World Bank for Sh38.92 billion($450 million) where the bank will loan it Sh12.95 billion($150 million) and guarantee Sh25.95 billion debt could be complete at the beginning of next financial year in July.

– The Star

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