The government has asked millers to diversify into electricity generation to expand revenue streams, be competitive and help the country meet power demands.
The State is dangling a feed-in tariff of US10 cents (Sh10) per kilowatt-hour to encourage the struggling industry into a revenue portfolio expansion.
This could each miller up to Sh90 million a year by using the heaps of bagasse churned out from daily milling processes to generate biomass power.
In the move targeting all western Kenya-based millers, the Energy and Petroleum Regulatory Authority (Epra) estimates that 150 megawatts could be generated and injected onto the national grid by 2022.
This could help stabilise the region hitherto starved of reliable power supply which, according to the Kenya Association of Manufacturers, has impeded proper growth of industries.
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The association has in the past raised alarm over poor voltage stability and losses accruing from instability occasioned by transmission on long distances.
The power generation by millers could also bring to an end expensive importation from Uganda and could potentially decommission the costly thermal backup plant at Muhoroni, according Epra.
Speaking during a stakeholder workshop in Kisumu on Friday, officials from Epra, Kenya Power and the Sugar Directorate sought to convince the sugar millers that co-generation was a viable venture with potential to help them stay afloat and create jobs.
Epra Director General Pavel Oimeke said that from their estimations, bagasse from the 43,000 tonnes of cane crushed per day was enough to produce power for the millers’ needs and sell off excess of 150MW.
He said the factories needed to conduct very minimal adjustments to start exporting power to the national grid on 20-year deals through one of two power purchase agreements with Kenya Power.
Although representatives of the millers said they were willing to commit to co-generate and sell to the distributor, concerns over why the Mumias Sugar Company model failed kept many skeptical.
Cane poaching
An official who declined to be named because he is not allowed to speak for the company explained that Mumias “was burdened by chronic lack of bagasse as cane poaching crumbled its sugarmilling operations and consequently bagasse production.”
Mumias, which is renegotiating its power purchase agreement with Kenya Power, chose to run the power plant as a separate business. This means it committed to supply a certain threshold to the grid, but was unable to do so as its fortunes crumbled.
The millers said they would only go into cogeneration “once the chaotic industry is sanitised through pending regulations.”
These plans are clouded by uncertainties rocking the collapsing industry where nearly all the public sugar mills are out of operation largely due to a biting cane shortage, need for maintenance and mismanagement.
