20 September 2013 – Over the past decade Kenya has doubled its installed generation capacity to 1,600 MW, of which 80% is accounted for by KenGen. Now the country is seeking to increase its total generation capacity to 6,500 MW in about three and a half years. Initially, according to Kenya’s Vision 2030, it was to have an additional 1,500 MW of electricity in place by 2017, which would increase total capacity to a little over 3,000 MW.
However, the Standard Digital reports that the country’s government has decided to fast track this process.
The plan is to retire the thermal generators, which use diesel. This will bring down the cost of electricity significantly, given that fuel is cited among the larger components of electricity bills.
Kenya has an existing framework for Independent Power Producers (IPPs), with seven such existing firms. Another five IPPs are in the implementation stage of projects and the country’s government says it wishes to significantly open power generation to private investors guided by the already developed power matrix.
Nikhil Hira, head of tax practice at Deloitte East Africa, says the plan would drum up significant investor interest from developed markets. “It is clear that we are short of power and need to increase it in a big way and fast. If Kenya is to achieve middle-income status by 2030, it needs to sort out its power issues.”
The high cost of power in Kenya has been cited among factors that have made the country an unattractive investment destination. It has also made locally manufactured goods uncompetitive, not just in the export market but also at home, with imports retailing at lower prices.