Co authored by Loise Machira

Toshiba’s Subsidiary in India recently won a major order for Power Distribution Transformer to supply Kenya Power with some eight thousand (8000) transformers over three (3) years. Toshiba Corporation (TOKYO: 6502) was awarded a USD 34 million contract by KPLC to supply approximately eight thousand (8000) distribution transformers. The order is the second that it has won from KPLC. It is expected to fulfill the order over the three years from June, and will install the transformers in the transmission, distribution and substation network that connects power plants and end-consumers in Nairobi, Mombasa and surrounding regions.

The high demand for electricity has prompted Kenya Power to step up the use of expensive thermal power, denying consumers cheaper electricity at a time when the use of low cost geothermal and hydropower has increased. The ERC has however promised cheaper electricity bills for homes and businesses due to ongoing heavy rains that have filled dams for cheaper hydropower generation. Hydropower is Kenya’s cheapest electricity source but is unreliable since it is dependent on weather. This has prompted a diversification plan hinged on renewable energy, especially geothermal.

Kenya Power recently sought the Energy Regulatory Commission's approval to raise consumer charges in order to cover rising operation costs and upgrade its transmission network. This was however blocked by the Ministry of Energy. Kenya Power, is a public listed company with the Government holding majority shares at 50.1% stake; giving it a big say in the firm's operations. Ben Chumo, the Managing Director said the quest to increase tariffs was informed by the need to pay for new power generation projects and to revamp the transmission lines.

Kenya Power has for long been blamed for outages and the scale is expected to rise as rapid rural electrification is carried out. However, in a bid to reduce such occurrences, Kenya Power will see seventy six (76) technicians trained at the Institute of Energy Studies and Research at a cost of KES 150 million. The training referred to as “no black-out maintenance technique”, is only offered in South Africa and it involves an intensive one (1) year training of technicians and several tests of equipment to determine their insulation capability, owing to the risks involved.

The European Investment Bank is in the process of financing a project whose objective will be to enable the country to significantly increase the number of customers (households and industries) that will have access to affordable electricity. The project's economic benefits include increased number of connections, increased access to reliable electricity for households and businesses, improved economic development in Kenyan rural areas and reduction of disparities between rural and urban areas. The project comprises a programme of electrification schemes targeting the connection of customers to the distribution network in thirty two (32) of Kenya's forty seven (47) counties. The Kenyan Government in its Vision 2030 development programme launched in 2008, identified energy as being one of the key enablers to attain 10% GDP growth target.

The Kenya Power and Lighting Company recently invited bids for one thousand (1,000) distribution transformers for the Kenya Electricity Modernization Project, for which the Government received a loan from the International Development Association. The bidding will be conducted through the International Competitive Bidding procedures as specified in the World Bank’s guidelines.

References

Kenya Power invites bids for 1,000 distribution transformers, Transformers Magazine

Kenya Power distribution last mile connectivity, The European Investment Bank

Kenya Power’s bid to charge consumers higher tariffs flops, Business Daily

Kenya Power plans to roll out new technology to stop outages, Daily Nation

Power levies stagnate for four months, shows data, Daily Nation

Toshiba Subsidiary in India Wins Major Kenyan Order for Power Distribution Transformer, Toshiba

This article first appeared in the Oraro & Company Advocates website (www.oraro.co.ke) on 8th July 2016. 

(These articles are of a general nature; the developments and impact of these legislative developments have only been summarized here. This report is not intended to address the circumstances of any particular individual or entity. While the information is accurate as at date hereof, there can be no guarantee that the information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice and after a thorough examination of the particular situation).