On 2018-11-22, the government said it was preparing to spend Sh9 billion to terminate the contracts of three diesel-fired power plants, in a move aimed at easing Kenya’s dependence on expensive thermal electricity.
Energy Cabinet Secretary Charles Keter told the Senate Energy Committee at Parliament Buildings that the buyout was being treated as the cheaper option compared with ending the wider set of thermal agreements. He said the State was working with the National Treasury on a task force report before taking the matter to Cabinet for approval.
“Instead of paying them, we would rather leave them to operate for the contract period and only buy power from them when we need it. Paying for power that they generate during the period would be cheaper,” Mr Keter told the Senate Energy Committee at Parliament Buildings.
The three plants are part of a larger group of thermal producers that rely on heavy fuel oil or diesel. According to the government’s assessment, terminating the contracts of the other seven plants would cost about Sh67 billion, making a full exit far more expensive.
Keter said the country could meet demand with limited use of thermal generation, but that the contracts themselves could not simply be cancelled. He argued that the State would be better off allowing the remaining agreements to run their course and only purchasing power when necessary.
The push to phase out costly thermal generation comes as Kenya adds more electricity from cheaper sources. Installed capacity has risen to about 2,700MW after the addition of 310MW from the Lake Turkana Wind Power project and another 55MW from the Garissa Power Plant.
Officials have long argued that geothermal and wind power should take a bigger share of the grid, but previous efforts to reduce thermal dependence have done little to lower consumer tariffs. The latest proposal is meant to accelerate that shift, even though it will still leave taxpayers carrying a heavy bill.
Published on 2018-11-22.
