The East African region may be headed for higher energy costs and a slow down in effecting new connections. FILE
Nation Media Group
By PETERSON THIONG’O The EastAfrican
In Summary
- Overall, system losses in Kenya, Uganda and Tanzania are way above the global average of 10 per cent.
- As regional utilities continue to under-perform and electricity supply becomes ever dearer and less reliable, companies across the region are looking for alternatives to cut dependence on expensive grid power.
Power utilities in the East African region are
recording rising system losses, while a mix of government directives and
expensive thermal power is quickly worsening their financial
positions.
Overall, system losses in Kenya, Uganda and Tanzania are way above the global average of 10 per cent, a situation that has left the power utilities Kenya Power, Umeme and Tanesco, grappling with spiralling operating costs that are passed on to consumers, making power more expensive in the region.
In Kenya, increased customer connections have put pressure on the country’s utility, with system losses rising from 16 per cent in 2010 to 17.3 per cent in 2012. Kenya Power is also having to subsidise new connections, which it says has eroded its cash position and impacted negatively on its investment plans.
Mid May, the government rejected a proposal by Kenya Power to increase electricity tariffs. Kenya last reviewed electricity tariffs in July 2008, and Kenya Power was hoping the next adjustment would cover the period to 2016.
In Tanzania, a government directive granting Tanesco the right to effect only a 40 per cent tariff increment compared with the 155 per cent increment sought by the utility has left the firm unable to raise enough cash to cover its costs, pay its suppliers on time and finance infrastructure projects that could help it lower its system losses, currently estimated at 24.3 per cent.
The World Bank estimates that the total arrears owed by Tanesco will have risen from $250 million as at the end of December to about $500 million by the end of this month. The company is also said to lose another $25-$30 million every month due to technical reason
.In Uganda, although system losses have dropped from a high of 35 per cent in 2005 to about 27.3 per cent last year, the utility firm Umeme continues to face infrastructure constraints, especially in its medium voltage power distribution lines. Data shows some are as long as 200 kilometres, effectively contributing to higher transmission losses.
Umeme in its latest report said that it spent $36 million on capital investments, taking the total cumulative investment to $166 million and the under-appreciated asset base to $125 million.
Rwanda is racing to scale up its power output as
it seeks to meet a target of supplying 70 per cent of the population
with power.
Through the Energy, Water and Sanitation Authority (Ewasa) the country last year embarked on a seven-year plan to develop new hydropower and geothermal and methane gas sources.
As regional utilities continue to under-perform
and electricity supply becomes ever dearer and less reliable, companies
across the region are looking for alternatives to cut dependence on
expensive grid power.
“The cost of power is a major concern; there is no question about that. We have to consider alternatives,” said Allan Walmsley, managing director of Sameer Africa which has disclosed in the latest company annual report that the group is looking into either solar or coal to power its plant.
Access to electricity is generally low in East Africa. According to the World Bank, only 15 per cent of households in the region are connected to national grids. Tanzania has the highest number of households without electricity at 7.2 million, followed by Kenya at 6.2 million, Uganda at 5.5 million, Rwanda at 1.7 million and Burundi at 1.4 million
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