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Kenya: Mumias Signs Power Sale Deal
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The Nation (Nairobi)
16 May 2008
Posted to the web 16 May 2008
Philip Wahome
Nairobi
A sugar miller has signed a power sale agreement with the Kenya Power and Lighting Company to provide electricity to the national grid.
Under the deal, Mumias Sugar Company will sell 26 MW of electricity to KPLC, up from the current 2 MW.
But even as the agreement was being signed, KPLC warned that the country's power demand could outstrip supply with plant outages expected as at early this week.
Cut surplus
This will, in effect, cut the available surplus to less than 25 per cent of the accepted international standards.
Out of the 15 per cent that is the internationally accepted reserve margin, the country had only 4 per cent, or 44 megawatts, by Tuesday.
"Effective capacity is quite often eroded by plant outages and, as of Tuesday this week, available capacity was 1,088 MW," said Mr Don Priestman, the Kenya Power and Lighting Company general manager and chief executive.
Even in the absence of plant outages, the situation is not any better since the current peak demand is 1,043 MW compared to an effective capacity of 1,156 MW, which gives a reserve margin of 11 per cent. Mr Priestman spoke during the signing of the power purchase agreement at Stima Plaza in Nairobi, on Thursday.
The bulk purchase price for the new Mumias supply is 6 US cents per kilowatt hour, an increase of 2 US cents on the previous purchase price. The new price has been approved by the Energy Regulatory Commission.
"We now have an additional stream of income which is a good sign of a company that is continually seeking to improve its services," said Mr Evans Kidero, Mumias Sugar Company managing director.
Main product line
Since inception, the sugar industry has solely depended on the sale of sugar as the main product line to generate revenue.
The industry has, however, been forced to diversify sources of income in the face of increasing regional and global competition. Presently, the industry regulator estimates that the sugar industry has the potential to generate up to 96 MW of electricity from bagasse.
It says that such an amount is enough for the industry itself and a surplus for sale to the national grid.
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Kenya Sugar Board estimates that the country's exportable electricity is about 75 MW valued at Sh2.8 billion annually. As such, would bag a third of this amount based on their current supply.
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