OBG talks to Ben Chumo, Managing Director and CEO, Kenya Power

Interview: Ben Chumo

What challenges exist in addressing Kenya’s electricity shortfalls?

BEN CHUMO: Issues in adequacy of supply are currently being addressed by the government and other entities such as KenGen, the Geothermal Development Company and independent power producers (IPPs).

There will be close to 1000 MW from IPPs by December 2016, and it is Kenya Power’s responsibility to facilitate these connections. It may be a challenge to secure demand to meet the new supply. We are meeting a number of associations like the Kenya Private Sector Alliance (KEPSA) and the Kenya Association of Manufacturers, as these groups will consume most of this new energy. KEPSA in particular has been calling for adequate and cheap energy for a long time. These organisations will give us their plan for how this new supply will be used, either through the expansion of existing manufacturing plants or by new players entering the market. Manufacturers are the principal electricity consumers and about 5000 of Kenya Power’s current 2.5m customers provide 60% of our revenue.

The idea of planning future demand for power is now a national debate, and we need industry to voice their opinions. We have traditionally grown supply by between 20 and 30 MW per year, so the planned increase in supply of 5000 MW by 2030 will be a new challenge for us to manage. Energy will become the catalyst for economic growth, alleviating unemployment, insecurity and poverty. Some 40% of manufacturing costs go to energy; therefore, if by 2016 we can reduce our price for energy to between $0.07 and $0.09 per kWh, we will become significantly more attractive as a country for international investors.

What infrastructure improvements are needed to improve the reliability of the electricity system?

CHUMO: The quality and reliability of supply depends on the integrity of Kenya’s transmission and distribution network. When looking at the existing network, we will require more distribution substations as well as contingency lines to make the network robust enough to accommodate the additional generation supply. Kenya Power is working with the Kenya Electricity Transmission Company (KETRACO) to create new transmission networks that will connect us to generators. KETRACO was established by the government because these investments are highly capital intensive. It would be impossible for Kenya Power alone to raise sufficient capital for these major projects.

Combining adequate supply, based on the 5000 MW target, with a robust transmission and distribution network is how we will deliver competitiveness in terms of price. The generation mix also has an important role to play in reducing energy costs, with geothermal and wind energy expected to take the place of more expensive thermal energy over time.

What specific measures are being taken to boost connectivity in rural areas?

CHUMO: The government established the Rural Electrification Authority (REA) in 2006. The role of REA is to address connectivity at the rural level, particularly with customers who are not commercially viable. The government provides resources to REA to expand the electricity distribution network and then Kenya Power completes the final mile of the connection to the customer. REA has an ongoing project to connect 6000 schools, which will, in turn, extend power to the surrounding villages. Additionally, Kenya Power now has managers with offices in each county who are responsible for supporting the rural electrification programmes in their area.

Whereas we previously required customers to apply for connectivity individually, we are currently identifying clusters of 50 customers in order to facilitate the application process. We then give these clusters a single quote for a negotiated fixed rate for up to seven years. Collaborating closely with REA and the government, we expect the rate of access to electricity, which currently stands at 35%, to improve to 50% by 2016.