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Kenya: Mumias And KPLC to Sign New Power Purchase Deal
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Business Daily (Nairobi)
14 May 2008
Posted to the web 14 May 2008
Michael Omondi
Mumias Sugar Company is today expected to sign a power generation deal with Kenya Power and Lighting Company as the sugar miller seeks additional income streams.
The deal will see the sugar miller inject 24 megawatts into the national electricity grid in the last quarter of the year in addition to the two megawatts it pumps now.
The power deal is a boon to the country's power system that is on the edge of a crisis as the growing demand for power is putting a strain on the country's generation capacity.
Financial details on the deal remained scanty last evening since it was not clear whether KPLC would buy the power at the previous contract price of about Sh2.50
With competition in the sugar market expected to become stiff in coming years, the sugar miller is betting on power generation to support its business after it launched the $50 million power generation project.
Mumias uses a sugarcane waste product, bagasse, to produce power and is estimated to be less than half the cost of generating electricity from imported petroleum or natural gas.
The Mumias deal is set to lessen the headache on the Ministry of Energy, which has been shopping for additional power to avert a power crisis.
The power reserve limit- the difference between demand and supply for - has sunk to record levels.
KenGen- the principal supplier of electricity to KPLC- says a growing demand for energy had pushed the reserve limit to 11 per cent of operational capacity, against an optimum level of 15 per cent set by the electricity regulator to prevent unforeseen shortages.
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The country's effective capacity stands at 1,143 megawatts compared to peak demand of 1,010 megawatts, leaving a thin reserve of 133 megawatts compared to the required reserve of 172 megawatts.
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