As Kenya stares at looming power crisis, the emotive issue of land is fast taking the centre stage on why the push for cheaper and reliable electricity supply remains elusive.
Cartels buying land and selling it at “ridiculous prices” could also be at play, making it almost impossible for the government to acquire way leaves.
Delay in the completion of power distribution lines have emerged as the biggest hurdle to the realisation of a plan that seeks to reduce power tariffs by at least 40 per cent in the next two years in the country.
The dire situation was last week brought to the limelight when Tata Group said it would scale down soda ash production at Magadi plant due to high electricity costs. About 200 jobs are on the line.
Already, poor rainfall has seen the cost of power go up by Sh2 per unit even as Kenya inches closer to turning on the more expensive thermal power generators.
“If we had adequate interconnection network, we would not be worried about depletion of water in the major dams,” Kenya Power managing director Ben Chumo said last week.
The problem, it seems, is that the Kenya Electricity Transmission Company (Ketraco), is running late in laying power lines to evacuate cheap power from already completed projects and in other instances, its holding back development of affordable energy works.
Among the mega projects that are facing delays due of lack of evacuation capacity are the Lake Turkana Wind Power Project (LTWP) and part of the 280MW Olkaria geothermal plant.
The 280MW project is the single biggest plant in the Jubilee administration’s target to generate an additional 5,000MW in slightly over the next two-and-a-half years. The plan will boost efforts to cut the cost of power by up to 40 per cent.
But Joel Kiilu, managing director of Ketraco — the state agency responsible for the construction of the huge power lines — said way leave (right of way) acquisition is to blame for the delays in completion or conception of transmission lines required to relay additional cheaper power to the national grid.
The residents are demanding high compensation leading to time wastage during protracted negotiations for right of way,” Mr Kiilu told Smart Company.
Last week, Ketraco ran an ad calling on landowners in Kiambu and Kajiado to come out and make claims on payments to allow for the construction of Suswa-Isinya transmission line.
“Although we have so far been able to reach most of the persons affected by the project… there are a few landowners who we have not been able to reach,” the notice signed by Mr Kiilu read.
Completion of Suswa-Isinya-Embakasi line is crucial as it would evacuate additional output from Olkaria fields.
“The Loiyangalani-Suswa, Kenya- Ethiopia interconnector and the Nairobi-Mombasa lines have faced substantial delays because of land acquisition issues and financing structure,” Mr Kiilu noted.
There are delays on the Nairobi Ring which is also slowing down progress on the Olkaria-Suswa-Isinya and Isinya-Embakasi lines.”
Mr Kiilu said they plan to involve the National Land Commission to surmount potential challenges facing the projects some of which construction has started.
Kenya Power says lack of interconnectedness with neighbours is also derailing efforts to tap into cheaper power sources.
“The lack of transmission infrastructure has also hampered our plan to tap into surplus and cheaper power from our neighbours such as Tanzania and Ethiopia. Currently, we can only import 50MW from the Bujagali plant in Uganda,” Mr Chumo added.
Among the generation projects, KenGen’s 280MW Olkaria geothermal project will be commissioned during the final week of June and another 70MW will be commissioned the following day.
In August, some 70MW of geothermal generated power will be commissioned while a similar capacity is set for launch later in September. The plant was set to start generating power on April 24, this year.
The two crucial transmission lines — Olkaria IV-Suswa and Olkaria I-Suswa — needed to evacuate the electricity were not completed in time, prompting a two-month postponement on commissioning of the plant to June 24, 2014.
In total, Ketraco has seven power evacuation lines but none is complete.
Mr Kiilu, however, added that some of the planned lines will be completed by the time the generation plants are ready.
“We have started work on all projects. The contractors are on the ground for the Menengai–Soilo line. This will tap into the 200MW of new capacity from the Menengai wells by the Geothermal Development Company (GDC)”, he said.
KenGen aims to raise power generation from geothermal sources five-fold to 693MW from the current 140MW.
This new supply would be followed by an estimated 100MW in December by the GDC which already has wells with steam that is ready for harnessing to generate another 200MW.
Energy Cabinet Secretary Davis Chirchir says the country is also on course to have a new coal power plant that would generate 960MW at Lamu and the award for the contract will be done this month.
A weak power evacuation and distribution infrastructure is also an hurdle facing efforts to reduce the cost of power.
Land for both the 700MW Liquefied Natural Gas plant and the Dongo Kundu and Lamu coal projects have also emerged as fresh challenges with the sites yet to be secured.
“Delays in completion of evacuation lines should be reduced,” Mr Pradeep Paunrana, managing director for Athi River Mining cement company and incoming chair for the Kenya Association of Manufacturers said in a telephone interview.
“Take for instance, we have a cement plant at Kaloleni but we cannot tap into the power at Rabai because the transmission line is incomplete.”
His concerns rekindles memories of 2012 when the World Bank withdrew guarantees it had agreed to offer Turkana wind farm project, partly because of the power purchase agreement that committed consumers to paying billions of shillings for unused electricity — effectively beating the initiatives’ primary purpose of cutting the cost of energy in Kenya.
Besides concerns over demaqnd, the World Bank also doubted Ketraco’s ability to complete the Sh20.6 billion transmission line between Loiyangalani and Suswa in time for immediate hooking of Turkana wind power to the grid.
The World Bank said its experience with construction of power lines in Kenya is that it cannot be completed within the set time, a reality that would expose Kenya Power to paying for electricity it will be unable to supply as consumers pay for what they have not used.
The bank entered the project last year in response to a government request for assistance in the provision of guarantees to the sponsors.
Most recently, similar concerns were raised by LTWP new underwriter, the African Development Bank (AfDB), which is the lead debt arranger.
It blamed hurdles in the construction of the power line on delays in issuing insurance to the work, as demanded by the financiers.
“The LTWP transmission line delayed the partial risk guarantee demanded by financiers before the project starts,” said AfDB in a brief.
Aldywich International, the project lead investor said construction of the line is vital for the wind farm’s success.
