Kenya to invite bids for transmission contract

NAIROBI, KENYA - Kenya Power and Lighting Company KPLC, Kenya's electricity transmission and distribution entity, has announced that it will soon invite bids for its 883-kilometer transmission line contracts.

The bidding process will be completed and the name of the selected bidder will be declared by February next year. The power transmission lines, which will include low-voltage, 33-kilovolt kV and 11-kV links, will be constructed in Nairobi, and in the western, coastal and central regions of Kenya. The selected bidder will have to execute the contracts within two years after receiving the order.

In the background of increased economic activity and a growth in population and power demand, KPCL, in association with the Kenya Electricity Transmission Company Limited KETRACO, is undertaking power transmission augmentation projects. In the next four years, KETRACO is planning to add 1,800 kilometers of high-voltage transmission lines in Kenya. The projects will be financed by government funds and a loan from the World Bank. The World Bank loan will be part of the Energy Sector Recovery Project fund. Recently, KPCL also floated a rights issue to raise about $9.5 billion.

According to Patrick Nyoike, the permanent secretary at the ministry of energy, only 29 of Kenya's population has access to electricity. On average, due to a poor distribution and transmission network, the country faces 600 blackouts in a month. Power outages have adversely affected industrial output, business and commercial activity. Nyoike indicated that about $500 million would be required for the refurbishment and improvement of the transmission network. The funds are expected to be raised by 2014. Of this, $199 million has been allotted to KPTL. The augmentation projects are expected to increase Kenya's per capita power consumption to 300 kilowatt-hours kWh from 144 kWh.

A study by the World Bank reveals that the growing gap in power supply-demand has impacted Kenya's economic growth. New business investments have declined, which caused the country's gross domestic product growth rate to decline by about 1.5.

The country's demand for electricity is growing at an annual average of 8. The price of fuel and power is also increasing correspondingly. As a result, power developers are focusing on thermal power generation since it is cheaper than fuel oil- and gas-based electricity generation. According to a report released by KPLT in November this year, thermal power generation met 36.5 of the primary energy demand in comparison to 28 in July.

The "Kenya Power Report Q4: 2010," published by Business Monitor International, indicates that during 2010-2019, Kenya will witness a 75.5 increase in electricity generation. During this period, thermal power generation will grow 114. In 2010-14, Kenya's average gross domestic product growth is estimated to be about 5.32.