Over the past year ,Kenya’s power agencies have been involved in unending conflicts that has seen power transmission lines stall, transformers breaking down and geothermal projects that have never kicked off.
Geothermal power is one of the green energy sources and relatively cheap compared with other alternatives that the country has embraced to bridge the electricity generation gaps.
It’s estimated that the geothermal potential of the country is 10,000MW.Despite this ,of the 2,711 megawatts (MW) of Kenya’s installed power generating capacity, geothermal accounts for 663MW or 17 per cent of this.
The country’s geothermal exploitation solely takes place in Olkarai but there is a huge potential in Menengai and other parts of Rift Valley .
Despite the Geothermal Development Corporation (GDC) de-risking the Menengai geothermal fields and laying basic infrastructure to attract investors ,not a single unit of power has been produced from the region despite spending billions of taxpayers’ money.
In a shocking twist of events ,GDC has tried to use three firms that were competitively selected to put up power plants as a scapegoats .
The three companies were expected to invest a combined Sh30 billion in the power plants that were scheduled to start operations in December 2015.
The companies were expected to develop three power plants separately with a combined capacity of 105MW under a Public-Private Partnership (PPP) where the State would provide the steam, with the investors putting up the plants.
The electricity plants within the fields were to be fully developed with wells drilled and piping done to direct geothermal steam to central points.
However, before the National Assembly’s Committee on Energy ,the State power generation firm said that they had failed to secure funding to construct the power plants.
They defended themselves claiming that they noted had met all their obligations in availing infrastructure, including drilling of wells and piping steam to areas where three private companies are supposed to build power plants.
In addition to that,GDC failed to explain to the committee why they failed to pile pressure on the firms that were given the tender to put up the power plants .
GDC has been involved in numerous scandals where public resources is swindled .In the latest controversy earlier this year, it came put that it had made payments of Sh 1.4 Billion to a Chinese firm which was strange to them .
Well, in another area where the corporation said has huge potential for geothermal power, it awarded Hong Kong Offshore Oil Services (HOOSL) to develop between 15 and 20 wells in Baringo Silale in 2014 .Five years later, work is yet to begin and GDC has recently started querying the capability of the company and sought advice from the Attorney General on instituting legal proceedings. It noted that it had drilled the first exploratory well in the area in September .
In another project that could turn out to be a possible rip-off to taxpayers, The Rural Electrification and Renewable Energy Corporation (REREC) towards the end of last year commissioned its 54MW solar power plant built at a cost of Sh13.5 billion in Garissa.
Compared to other plants of similar scale that private players are planning to put up, it confirms that REREC plant may have cost twice as much.
In comparison, feasibility studies in the planned 45MW plant by KenGen in Embu indicated it will cost Sh 5.7 Billion. A 52MW solar plant in construction in Malindi by Malindi Solar Group majority-owned by UK-headquartered Globeleq is estimated at Sh7 billion and another 40MW power plant at Rumuruti, Laikipia County constructed by a private entity Kenergy Renewable is expected to invest between Sh 6 Billion and Sh 7 Billion.
As of April this year, REREC claimed it had bagged Sh431 million from the sale of electricity to Kenya Power from the plant.
The higher-than-average cost will burden the taxpayer when the government starts repaying the loan advanced by China’s Export-Import (EXIM) Bank, with China Jiangxi being the lead contractor of the consortium that include two other Chinese firms to construct the Garissa plant.
In the past ,REREC said that the high cost was a result of the agency being a relatively “early adopter” of solar energy, with negotiations to build the plant having been done at a time when the cost of equipment was fairly high.
Surprisingly ,the cost of solar equipment has gone down over the last decade in some instances by as much as 90 per cent leading to questions as to why the contract was not executed until two years ago.
In another mistake that the state has subjected the taxpayers into more debts, in the Lake Turkana Wind Power (LTWP) project ,it paid heavy penalties to the investors and was forced to look for another contractor which had the net effect of doubling construction costs.
In an agreement with LTWP ,the state said it would have a transmission line in place when the firm finished building its 364MW plant.
However, it was not in place in time and the State was penalised since the company was unable to monetise its investment.
In the absence of the line, the government was supposed to pay Sh1 billion every month until the infrastructure was in place.
After negotiations, it was agreed that the State would pay Sh14.5 billion (127 million euros) split into Sh5.6 billion upfront and Sh9 billion over six years which is being paid by consumers through a charge on the electricity bill.
Under the deal brokered, the power plant would sell electricity to Kenya Power at 7.5 euro cents (Sh8.6 at current exchange rates) per unit of electricity as per the power purchase agreement, in addition it will levy 0.85 Euro cent to cater for the penalty, bringing the tariff to 8.529 euro cents (Sh9.8).
Kenyans share of struggles has been attributed to Kenya Electricity Transmission Company (Ketraco).The firm awarded a tender to a Spanish firm Isolux Corsan that was having financial challenges and would later file for bankruptcy hence abandoning the project.
Having been awarded the contract for the line in June 2011, it was expected to start construction in early 2012 and have it ready by the end of 2013.However, construction works started in November 2015 and expected to complete in August 2016.
The initial project cost Sh 15 Billion and having been forced to look for another contractor, it rose to Sh 28 Billion. Dodgy contractors, large sums of compensation from landowners and insecurity are some of the problems Ketraco faced besides the delay.
The Auditor General recently queried whether Ketraco undertook any due diligence before hiring Isolux Corsan.In its report ,he noted that projects worth more than Sh38 billion were facing delays as of June 2015.