UN WARNS DELAYS IN MAJOR PROJECTS WILL RAISE POWER COSTS

As East African countries launch massive projects in the power sector, the United Nations Economic Commission for Africa (Uneca) is warning that delays in implementing them could push the region towards expensive alternatives.

Kenya, Rwanda, Burundi, Uganda and Tanzania are in various stages of ambitious energy expansion projects that could add some 10,000MW — or three times the current EAC installed capacity — to the power grid, offering a cheaper alternative to thermal power.

Kenya plans to add some 5,000MW to the national grid, Tanzania 3,000MW and Rwanda 500MW.

It is now feared delays could have far-reaching effects.

“Delayed energy planning and investment in the face of growing demand for electricity is likely to drive the energy portfolio to thermal technology, choices that have lower gestation period but higher per unit costs of generation, undermining the ability to supply affordable, available and reliable electricity,” said Uneca in a report titled “Energy Access and Security in Eastern Africa.”

The region is especially keen to diversify from thermal power, with the four countries banking on renewable power sources such as hydro, geothermal, wind and natural gas.

In April, the World Bank approved a $100 million loan to partly finance two hydropower plants in Rwanda that will jointly generate 48MW. Currently the country faces a daily shortage of 20-25MW of power.

In Tanzania, the country plans to add about 1,800MW of gas-fired electricity into the grid over the next three years, while Uganda has begun construction work on the Karuma dam.

READ: Tanzania to use gas to double its power by 2016

Over the past two years, the region has been on an energy project upgrading drive, spending billions of dollars on infrastructure as it tries to reverse years of underinvestment that, coupled with the region’s low income levels, have kept millions of the region’s citizens out of the national grid.

For example, 80 per cent of the population in South Sudan and Burundi have no access to electricity compared with 70 per cent in Uganda and the Democratic Republic of Congo. In Tanzania, Rwanda and Ethiopia, the figure stands at 65 per cent.

Experts blame this on underinvestment in transmission lines as well as expensive connection fees.

For example, in the past five years, Kenya has raised the number of households connected to the national grid from about 700,000 in 2005 to an estimated 2.4 million, partly due to the construction of transmission lines in rural areas by the government through the Rural Electrification Authority.

But still, the high connection costs in the country — recently adjusted from Ksh35,000 to Ksh75,000 for households living 600 metres from a transformer — is still high for a country with a per capita income of about $1,000 where 46 per cent of the population lives below the poverty line.

The increased investment is expected to lower the cost of power with the Kenyan government, for example, estimating that in 2018 the retail price of a kilowatt of electricity will drop from Ksh19 to about Ksh9.