The end of Kenya Power Monopoly is inevitable as State-owned Kenya Electricity Generating Company (KenGen) is targeting flower firms and large industries in the proposed Naivasha Industrial Park as first customers for direct electricity sales, officials have said.
Power Sales Monopoly
This comes at a time when Kenyan lawmakers, East Africa’s biggest economy, approved a new law that could abolish Kenya Power Ltd.’s monopoly on grid-electricity distribution.
With the proposed new legislation, which still needs presidential approval, the Energy Regulatory Commission will license new companies to sell power and take away Kenya Power’s control over the dispatch center, which determines what energy sources will feed the national grid.
Kenya Power and Lighting Company Limited changed its name in 1983. The year the monopoly in power supply is alleged to have blown up. Kenya Power is partly owned by the Government of Kenya with 50.1 percent shareholding, and private investors with a 49.9 percent shareholding.
KenGen Fights Power Sales Monopoly
Listed electricity distributor Kenya Power currently has a monopoly on power sales but the Energy Act 2019 provides for the opening up of the sector. Until now, KenGen has been restricted to electricity generation, alongside Independent Power Producers (IPPs).
“The flower firms and large industrial investors would be our first customers if the proposal is approved by the Energy and Petroleum Regulatory Authority (EPRA),” said Cyrus Karingithi, the KenGen assistant manager, resource development and infrastructure.
Once KenGen gets full-go ahead from the relevant authorities, most of them who are benefiting from the Kenya Power Monopoly. Selling electricity directly would come as a big boost for KenGen’s revenues on outmaneuvering Kenya Power.
In February, the State offered investors a low power tariff of Sh5 per kilowatt-hour (kWh) to set up factories in Special Economic Zones (SEZ) in Olkaria, Naivasha, as the government takes steps to grow the manufacturing base and create more jobs. The Energy and Petroleum Regulatory Authority (Epra) approved the darling tariff deal for big factories that will set up base in the special zone.
Under the 2019/20 budget, the government allocated a total of Sh1.1 billion to go towards the development of textile and leather industrial parks, the Naivasha Industrial Park and the Cotton Development subsidy.
Construction works at the Sh6.9 billion industrial park began early last month after President Uhuru Kenyatta opened the Mai-Mahiu SGR Terminus.
Foreign investors from India, Europe, United States of America (USA), the Netherlands, China, Sri Lanka and Thailand are said to be interested in setting up base within the economic zone.
Danish Brewing Company E.A Limited, a subsidiary of Bounty Global Management DWC LLC is set to be the first anchor tenant at the Naivasha Industrial Park.
The beer maker has set aside $45 million (Sh4.59 billion) to set up its operations in the country. The brewer of Tuborg, Carlsberg, Holsten, and Kronenbourg beers, as well as Somersby Cider plans to set up a plant with a production capacity of 12-15 million cases of beer annually.
Market data shows the Sh5/kWh tariff is about half what is charged large-scale commercial consumers who pay between Sh10.10-12/kWh at peak hours.
Mr Karingithi said KenGen has recently diversified revenue streams on sale of geothermal steam to flower firms. The Oserian Development Company has been using geothermal energy from KenGen to heat rose greenhouses that have expanded to 50 hectares since 2003.
