Ben Sanga And Catherine Riungu
6 July 2009
Nairobi — After years of bad news, the tea industry finally has some good news.
That the sector could soon generate its own electricity to ease product processing and save at least half of its operation costs.
Although it may be a while before tea factories are lit up by own generated electricity, when the power projects roll-out, tea factories will finally be self sufficient.
Tea factories currently pay Ksh16 per kilowatt hour of electricity used but the cost of the same amount of electricity from the proposed small hydro projects will cost Ksh4.80.
In June, tea sector players from East Africa kick-started plans to construct hydroelectric power generators to produce electricity for the region's 177 tea factories. The small hydropower plants are expected to cover all the factories in the next 20 years.
Experts say that once the initiative, spearheaded by the Mombasa-based Greening the Tea Industry in East Africa goes live, electricity costs associated with tea processing will come down by 50 per cent.
The viability of the programme is premised on the fact that all the 177 factories in the region are located in places ideal for hydroelectric power harnessing. Feasibility studies on two sites have been completed while six others will be ready in September.
The reduced production costs are expected to make the region's tea more competitive in the world market, which is currently reeling under the pressure of a production glut.
East Africa contributes 28 per cent of the world's tea exports, with Kenya being the largest exporter.
Bhola Shrestha, the director of the project said feasibility studies had been completed in Gura in Nyeri, Kenya and Nchwera in Uganda and that implementation on the former had already started. The two proposed projects will cost $8.75 million and $7.1 million respectively.
The Gura project, expected to be completed by 2011, will serve the Iriani, Gathuthi, Chinga and Gitugi tea factories and surplus power will be sold to the local communities.
The two project form the basis on which other tea factories will set up their own small hydro power projects.
Other countries targeted to benefit from the project are Tanzania, Rwanda and Malawi and committees have been selected in Kenya, Tanzania and Uganda to spearhead the initiative.
They comprise of the hydro power project developers, representatives from respective government ministries and utility and regulatory officials.
The other six ongoing feasibility studies include three sites in Kenya at Tagabi, Kapchorua and Mathioya, which are being carried out by Greame Watson Associates.
Those for Suma, Ruo and Giciye located in Tanzania, Rwanda and Malawi respectively are being carried out bySri Lankan firm Engineering Consultancy Bureau.
The Kenya Tea Development Agency, which manages the small-scale tea sector in Kenya is overseeing the implementation of the Gura project that is equally owned by the four factories after an investment agreement agreed on last December.
The factory boards agreed to own equal shares in the project with a debt-equity ratio of 65 per cent/35 per cent with preference for an EPC contract model of implementation.
Construction of the Gura power project will begin early next year.
Though the feasibility study for the Nchwera hydropower project in Uganda by Igara Tea factory as the potential developer was also completed last year, its implementation has been delayed by the factory's expansion programmes.
The small hydro power project has been successfully implemented in Nepal and Sri Lanka.
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