Energy CS defends Adani's Sh95b deal, says power costs won't rise

Energy Cabinet Secretary Opiyo Wandayi during a tour of Kenya Petroleum Refineries Limited in Mombasa on September 26, 2024. [File, Standard]

The Energy Ministry has defended the deal that the Kenya Electricity Transmission Company (Ketraco) has signed with Adani Energy Solutions and refuted reports that it would result in a hike in power prices. 

Energy Cabinet Secretary Opiyo Wandayi instead noted that the Sh95 deal that will see the Indian firm build and operate several key power transmission lines is expected to reduce electricity prices in the coming months.

CS Wandayi noted that electricity system losses stood at 24 per cent due to archaic transmission equipment.

System losses are the difference between what Kenya Power buys from power producers and what it sells to consumers. Kenya Power usually recovers what is lost from consumers.

This, he noted, necessitated the need to bring Adani on board to enable the government to meet the need to grow transmission infrastructure without tax hikes or taking more debt.

Wandayi was addressing journalists at Olkaria in Naivasha on the sidelines of the launch of the Kenya Electricity Generating Company (KenGen) 2024-34 Strategic Plan which seeks to pump an extra 1,500 megawatts (MW) into the national grid in the next ten years.

He said the multi-billion deal involved coming up with new transmission lines and stations, a move that would end massive power losses.

“Contrary to belief, the deal between Adani and Ketraco will bring down the cost of electricity and the government is keen on such public-private partnership projects,” he said.

Adani will be paid a fee by Kenya Power, which will use its lines for electricity transmission. The fee will be passed on to power consumers.

Currently, Kenya Power pays what is termed as wheeling charges to Ketraco when it uses its  high-voltage transmission lines to transport electricity to consumers’ premises and homes.

In the year to June 2023, Kenya Power paid Sh2.72 billion to Ketraco as wheeling charges.

Energy and Petroleum Regulatory Authority (Epra) director general Daniel Kiptoo said the Authority had received a provisional tariff from Adani and Ketraco.

He however noted that the rate would largely be determined by negotiations between the Public Private Partnership (PPP) Directorate that is housed by National Treasury and Ketraco on the one side, and Adani on the other.

“We as the regulator come in to ensure that whatever the parties negotiate commercially is within reason. We are here to balance the interests of consumers and investors,” he said yesterday in Nairobi.

“We have seen a provisional application from Ketraco but they are still in negotiations with the utility (Kenya Power). We will be following the process to ensure that by the time they conclude negotiations, we will be able to look into it and offer a final tariff.”

KenGen chief executive Engineer Peter Njenga said part of the ten-year strategic plan included pumping an extra 1,500MW into the national grid.

He observed that of the total amount, 800MW would be sourced from geothermal energy as the company geared towards increasing renewable energy while phasing out thermals.

Mr Njenga added that the power-generating company had plans to invest in a 500-hour storage system targeting power from solar and wind energy.

“This exercise requires $4.3 billion (Sh515 billion) and we are working with donors and development partners so that we can increase our installed capacity that stands at 1726MW,” he said.

Njenga assured the country of a continued supply of electricity from hydro-dams despite the harsh weather and warning of depleted rains in the coming months.

“Despite the harsh weather, water levels in our dams are very safe and the country will continue to get the supply of cheap electricity from our hydro-dams,” he said.

In Naivasha, Wandayi lauded KenGen’s efforts to increase power production in the country at a time when demand was rising from manufacturers and homesteads.

“The government is keen to increase production of renewable energy from the current 90 to 100 per cent and this can be achieved by supporting KenGen,” he said.

He also put on notice petroleum dealers who had not effected the recent fuel prices drop by the Energy and Petroleum Regulatory Authority (Epra) terming their days as numbered.

“We have information that some outlets are yet to bring down the prices and we have sent a multi-agency team on the ground to arrest them and close the petrol stations,” he said.

 Tourism and Wildlife CS Rebecca Miano lauded the launch by KenGen noting that most of the geothermal fields in Olkaria were located in Hellsgate National Park.

“KWS is working closely with Kengen in geothermal exploration and we have various joint conservation projects that will attract many visitors,” she said.