IMPLICATIONS

Delayed energy projects costing Kenyans billions—Keter

Companies have continued to claim billions in compensation for stalled projects

In Summary

•Power infrastructure is among projects that have from time to time faced headwinds as a result of resistance from local communities, leading to delays

•Among most affected projects is the 428-kilometre, 400kV Loyiangalani-Suswa line which is evacuating power from the Lake Turkana wind farm

Energy cabinet secretary Charles Keter./FILE
Energy cabinet secretary Charles Keter./FILE

Delayed power projects are denying Kenyans cheaper electricity have, according to Energy Cabinet Secretary Charles Keter.

He said delays have cost implications which add up to production and provision, eventually affecting the price of electricity which is passed on to the consumer.

“This is because there is a chain of production with cost implication in every process. In Kenya, power tariffs factor in the entire cost of project implementation which includes purchase of land, construction, commissioning and operations,” Keter noted.

 

He said the projects  are also delayed due to court cases.

"Therefore, a deliberate and strategic community engagement greatly reduces risks and costs associated with litigation,” the CS said during the launch of the KenGen’s Community Engagement Strategy.

Power projects have from time to time faced headwinds as a result of resistance from local communities, leading to project delays and  increased costs.

Awarding of contracts to unqualified and bankrupt companies has also continued to cost Kenyans as projects stall.

Among the most affected projects are under the Kenya Electricity Transmission Company (Ketraco) which has been implementing high-voltage projects of 400kV, 220kV and 132kV capacity, whose delays in their implementations has seen taxpayers slapped with hefty penalties.

Costly delays have been experienced on the 428-kilometre, 400kV Loyiangalani-Suswa line constructed to evacuate power from the recently launched 310MW Lake Turkana wind farm, where tax payers were slapped with a Sh3.8 billion bill.

One of Ketraco's contractors claimed an idling fee of Sh108 million per month, where it said its equipment lay idle for 21 months.

 

Wayleave compensation is another major factor causing delays with the ripple effect being felt by end users who have to incur the cost.

“As a country, we will save millions of shillings if we embrace a deliberate and proactive approach to engaging communities. The savings will come from avoided project delays and litigation,” Keter said in a speech read on his behalf by Engineer Isaac Kiva, Director of Renewable Energy at the Ministry of Energy and Petroleum.

He backed the CS saying when power generators are unable to evacuate energy, it ends up incurring costs which are passed on to the end user.

"We need to do projects in a competitive way to ensure we give competitive tariffs and lower power bills to the consumers," said Kiva.

He said the government remains focused on investing in renewable energy with modalities being in place to bring down the cost of electricity for industrial development and benefit to households.

Kenyan manufacturers are among the most hit where costs go as high as Sh15-Sh18 per Kwh, compared to neighbouring countries such as Ethiopia where their counterparts are paying as low as Sh3 per Kwh.

This has affected growth of industries, posing a threat to the government's Big Four Agenda on manufacturing.

Meanwhile, the ministry has lauded KenGen for spearheading an elaborate community engagement programme under its Community Engagement Strategy.

The strategy will steer the organization’s engagement with communities across the country and is part of its business sustainability strategy.

KenGen has invested billions of shillings in energy projects including geothermal, hydro and wind energy.

It said with the framework in place, there will be increased growth based on return on investment, risk mitigation, faster project implementation,  and reduced direct project costs.

Kengen also expects to reap from reduced risk of litigation and breach of legal obligations as well as enhanced social benefits for local communities and greater business resilience, among others, the management has said.

“As an organization, we have seen community expectations change over time, meaning we must always adjust the way we relate with them to fit into the dynamic environment in which we operate,” KenGen CEO Rebecca Miano said.

KenGen collaborates with communities within its areas of operation to improve quality of life, especially through promotion of education, water supply and environmental conservation.

The ministry is optimistic that going forward, the country will benefit from faster and cost-effective project implementation and reduced direct project costs, as a huge proportion of the billions invested in the projects is in form of commercial loans procured from development partners.