The untold conspiracy sabotaging cheaper electric power for all Kenyans

President Uhuru Kenyatta’s repeated campaign on Labour Day to expand electricity connections and reduce its cost for Kenyan consumers will have to contend with powerful interests keen on sabotaging any such initiatives.

There have been numerous efforts from the Government to have electricity costs come down, and growing number of Kenyans point out that there has been some modest reduction. To industry analysts however, it’s obvious that Kenyans should be enjoying far cheaper rates than what they currently pay.

While it’s an open secret that Kenyan consumers for years have borne the brunt of one of the highest electricity rates in Africa that ranged from Ksh 17 to Ksh 23, moves to fast track this reduction are hampered by interest groups who for years have continued to reap billions off our current electricity bills.

This high cost of power has made the cost of living and doing business in Kenya non-competitive. Kenya’s poor power supply has been blamed for high cost of living in the country. Its capital city Nairobi was in 2014 regarded as Africa’s most expensive city by the Economist Intelligence Unit.

It is for this reason that many investors have in the last 10 years relocated their manufacturing bases to countries such as South Africa and Egypt in order to reduce the cost of doing business.

On assumption of office in 2013, President Uhuru Kenyatta and his deputy William Ruto projected that the cost of electricity in Kenya would go down by 30% by the end of October 2014 and a further 50% this year.

The Weekly Citizen can authoritatively reveal these efforts will have to contend with a little talked about energy structure that  has over the year given diesel Independent Power Producers – IPPs over 76% of Kenya’s electricity budget every year.

Ironically while for example in the 2013/2014 financial year, the government paid 76% of its electricity budget (almost Kshs 57 billion) to the diesel generating IPPs, these companies produce only 30% of Kenya’s electricity.  The remaining 24% of the government electricity spending pays for 70% of Kenya’s electricity. It is an arrangement a majority of industry analysts describe as outrageous and criminal.

While most analysts believe the Uhuru administration is genuine in seeking to reverse this 30%-70% (generation) Versus 76%-24% (Cost)  ratio, there is doubt whether Jubilee can implement its energy manifesto fast enough as it will antagonize the masters of diesel power generation who are losing money since increasingly they are generating less and less electricity.

Last year’s data show that diesels generation has been coming down while being replaced by Geothermal. But more needs to be done to reduce the overall cost of power by the 50% benchmark that President Kenyatta pledged and Kenyans are demanding.

Geothermal activity in Kenya is abundant, so it makes very good sense to develop more geothermal power here. The question is: why is the journey towards more use of geothermal slow?

“Geothermal is our choice for speeding generation capacity. It only costs US 7c/KWh compared with diesel generation that costs 22c,” KenGen MD Albert Mugo has repeatedly declared in several speeches.

President Uhuru Kenyatta’s statement in 2013 that Kenya will henceforth bank on geothermal, wind, natural gas and other cheaper energy sources to reduce the cost of electricity is said to send shockwaves through the energy cartels fraternity as it put billions of dollars of business at risk for diesel power generation companies.

“Kenya plans to add 5,000 megawatts to its grid by the end of 2016, with geothermal power accounting for almost a third or 1,646 megawatts while wind will load 630 megawatts. The shift will reduce the cost of doing business and make Kenya one of the low-cost countries,” said Uhuru in 2014.

While Kenyans and the business community celebrated this announcement, little did most realize that the beneficiaries of the existing power arrangement would go tooth and nail to scuttle any moves to tap alternative green power.

The conflict is not hard to figure out with hard facts that the Weekly Citizen recently obtained.

It is on record that Kenya has been spending KShs. 44 billion annually on purchase of diesel for power generation alone, and an additional KShs. 13 billion on electricity generation.

Kenya’s over-reliance on hydro-power since independence has been hurt by lower rain levels which over the years have decreased hydro power output. To ease frequent power outages diesel thermal plants for emergency power were introduced. The power they generated cost 3-4 times more than hydro-power resulting in Kenyans paying higher and higher electricity bills.

This scenario became lucrative as newly introduced Independent Power Producer cartels preyed on the expanded demand for electricity to encourage inflated contacts to pay for “emergency power” while neglecting and sabotaging expansion of any alternative sources.

Under the KANU regime the ground was deliberately shifted to favour over-use of diesel for power generation since the people involved in the diesel generation were the same decision makers in the industry.

Between 1997 and 2003, diesel IPPs shielded by powerful KANU power brokers minted billions as hydro power plants were frequently “shut down for maintenance” and while the productivity of hydroelectricity was “officially” described as poor and unreliable due to hydrology occasioned by climate change. The government was “forced” to not only use the expensive diesel generated power, but to also deploy “emergency power”, which is four times more expensive at KShs 35 per kilowatt hour (sometimes as high as KShs 44 pkh) as compared to the average bulk power price at KShs 9.10 per kilowatt hour.