Electricity retailer Kenya Power now
says investment by Adani Group in
the country’s energy sector will
improve distribution and help cut
losses, despite coming at a cost.
The utility firm has backed the deal between Kenya Electricity Transmission Company (Ketraco) and Adani Energy Solutions, a subsidiary of Adani Group, which will see the Indian firm pump $736 million (Sh95.1 billion) into the construction and maintenance of a number of power lines and sub-stations in the country.
According to Kenya Power chairperson Joy Brenda Masinde, the deal will help actualise projects that Ketraco could not deliver due to cash constraints.
This, she said, will significantly improve the country’s power distribution network, stabilising power supply that has been affected by ageing lines that lead to frequent outages. “An entrant like Adani for us is quite exciting because Ketraco being fully government and then the government being cash-strapped means there are parts of the lines that Keraco could not.
Now that they have an investor who is cash-rich and has experience, hopefully during the next two-years the distribution network is more robust and easier for us to distribute power to consumers,” she said.
Masinde spoke during a forum by Huawei dubbed “Accelerating industrial digitisation and intelligence” at the ongoing Gitex 2024 (Gulf Information Technology Exhibition), in Dubai.
She however acknowledged that the investment could come at an extra cost since the Indian fi rm has to recoup its monies.
“Relief in terms of connectivity yes, in terms of pricing no, because with a private entrant there will be wheeling charges, they need to make a return on investment so there will be an additional component of a wheeling charge, but how the government works out on pricing that is up to EPRA,” she noted.
A wheeling charge in electricity bill refers to the fees imposed by the utility company for the transportation of electricity through its transmission and distribution infrastructure.
Adani Group will build and operate four key electricity transmission lines and two sub-stations for 30 years before handing over to the Kenyan government. The transmission lines and substations to be developed under the deal are 400kV (Double-Circuit) Gilgil-Thika-Malaa-Konza Line spanning 208.73 km.
The line will include new substations at Gilgil, Thika, and Malaa as well as substantial extensions at Konza. The deal will also see the development of a 220kV Rongai-Keringet-Chemosit Line covering 99.98 km.
The lines will come as a relief to the power distributor who has been on the receiving end as a result of back-to-back power outages blamed on its old lines, some dating back 102 years since electricity distribution lines commenced in the country.
“I am pleased to announce the successful signing of the Project Agreement between the Kenya Electricity Transmission Company Limited (Ketraco) and Adani Energy Solutions Limited today (the Project Company). The agreement marks the beginning of a transformative initiative to develop, finance, construct, operate, and maintain key transmission lines and substations across Kenya, Energy CS Opiyo Wandayi said last week.
The project is one of the biggest
Public-Private Partnership deal in
the energy sector, as the government turns to the private sector for
support in the wake of a strained
exchequer in terms of development
budget.