Tuesday, July 26, 2011

Kenya Power rationing blamed on drought and plant breakdowns

Power rationing blamed on breakdown of plants and drought


Posted Wednesday, July 27 2011 at 00:00

Breakdown of power generating plants and drought have forced Kenya
Power to ration supply. The cuts, which start Wednesday and mainly
affect industries, could dent Kenya Power�s future profitability
through reduced sales after the regulator froze tariff reviews.
Routine or forced maintenance has affected plants managed by KenGen
and private power producers IberAfrica, Tsavo Power, Or Power IV and
Mumias, cutting off 90 megawatts of supply.

The rationing will last two hours during the peak evening consumption
period of between 6 p.m and 9 p.m.

Kenya Power proposed to raise electricity tariffs by about 20 per cent
from July 1, for three years, but withdrew the proposition in view of
the impact it would have had on consumer budgets already stretched by
inflation and the competitiveness of Kenyan products in other markets.

The rationing programme will affect the bulk of industrial and retail
consumers at the main consumption points in Nairobi, Western Kenya,
and Mt Kenya while those in Coast have been spared the interruptions,
helped by normal operations at the Rabai power plant near Mombasa.

�There is a shortage of power of between 70 and 90 megawatts daily,
especially in the evening. It is inevitable, therefore, to supply
power on a rotational basis during the evening peak demand period of
about four hours,� said Kenya Power managing director Joseph Njoroge
at a news conference.

The programme could go on until late in the year depending on whether
the short October to November rains manage to fill the main dams along
River Tana.

The dams are currently below their spilling levels. The interruption
is certain to cost the Kenyan economy dearly as well as businesses,
especially small and medium enterprises that may not afford mitigation
through stand-by generators. [...]

Timing questioned

�There is not enough power generation reserve margin to meet rising
national demand, which is growing at eight per cent each year,� said
Energy Regulatory Commission (ERC) director for electricity Joe

But the regulator questioned timing of the rationing programme and
summoned the power utilities firm Tuesday.

�We have told them that timing of the plants� repairs should be
(harmonised),� said Mr Ng�ang�a.

KenGen is reportedly set to commission two gas turbines in a move that
will replace the costly emergency power supplied by Aggreko.

The fuel cost adjustment, now at Sh8 per unit, is borne fully by
consumers and paid to private power firms. In June, the rising cost of
food, fuel and power compounded inflation pushing it up to 14.49 per
cent. Three independent power producers � Gulf Power, Triumph Energy,
and Malec with a total capacity of 252 megawatts � are expected to
install diesel power generators. Two will be at Athi River and one in

The power shortage has also been compounded by the government�s delay
in commissioning diesel power generators.

Experts see the rationing as a stop-gap measure intended to solve the
power supply shortage as the government puts in place measures to
generate green energy in the next years.


The impact of the 2000 drought required the power provider to seek out
more costly sources, which not only enfeebled the firm financially but
also led to inflated prices, as both high foreign exchange rates and
rising fuel costs were passed on to consumers.

The situation was exacerbated by reduced sales due to a drought-
induced economic recession, high line losses, increased customer
default and theft, and increased fuel prices in the international
market, which could not be fully passed on to consumers due to a
pricing formula which assumes losses of maximum 15 per cent.

The World Bank�s 2000 Emergency Power Supply Project noted that
without the facility, losses to the economy would have amounted to
$400 million or about four per cent of GDP over the period of a nine-
month span, with costs for emergency power facilities estimated at
$110 million.

(email the author) zsambu@ke.nationmedia.com

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