For the first time, Kenya’s power utility, Kenya Power, has earmarked Sh424 million ($4 million) for the company to source locally assembled transformers during the current financial year.
Kenya Power invests locally
The utility has spent Sh6.2 billion ($58 million) on the purchase of locally manufactured goods in line with the ‘Buy Kenyan Build Kenya Initiative’, aimed at promoting the manufacturing sector.
The Company purchased pre-paid meters worth Sh4.7 billion ($49 million) in the year to 30 June from the local market.
Out of Kenya Power’s capital expenditure budget of Sh184 billion ($2 billion) for the last four years, the Company spent Sh120 billion ($1 billion) in purchase of locally manufactured electricity distribution equipment.
Implementing new guidelines
In July, Kenya Power published new procurement guidelines, which stated that 80% of all electricity distribution equipment will be sourced from the country, giving preference to local investors.
Industries account for more than 60% of Kenya Power’s electricity sales revenue, the utility stated adding that by supporting the manufacturing sector, it will boost the Company’s core business.
The new procurement guidelines have already attracted three international companies; Pan African Transformers, Yocean Group Limited and Continental Transformers, involved in manufacturing transformers to set up plants in the country, creating jobs for Kenyan citizens.
Kenya Power’s MD and CEO, Ben Chumo, said: “Kenya Power has taken a deliberate step to prioritise purchase of equipment and materials from the local market to encourage manufacturers to set up plants in Kenya. The aim is to retain at least 80% of the Company’s annual procurement budget, which stands at Sh54 billion ($1 billion), in the country.”
Speaking at a conference on Thursday, Chumo added: “We have 54 Kenyan companies currently supplying us with both concrete and wooden poles, eliminating the need to import these materials. This has created about 540 direct jobs for Kenyans and several other indirect employment opportunities.”
Kenya power improvements
According to the utility, the country’s electricity sector has grown in the period between 2013 and 2016, from an installed capacity of about 1,700MW to the current 2,341MW.
The peak demand stands at 1,620MW with a reserve margin of 33%, above the international standard, which is 30%.
As such, there are deliberate efforts to create demand for the additional generation capacity, which calls for investment in the manufacturing sector.
Demand for locally manufactured electrical equipment is set to rise with the implementation of various projects by the government that are meant to increase the country’s access to electricity.