Kenya's Interest Fading in Zambia-TZ Power Pool
Oct 08, 2007 - East African Business Week/All
Africa Global Media
The Eastern Africa power connectivity plan may not
take off unless Zambia, the main supplier in the interconnection
project, demonstrates its capacity to generate more
power for distribution to Kenya and Tanzania.
Kenyan officials have developed cold feet over the
multi-million dollar electricity deal whose construction
work is billed to begin in 2011 after the completion
of a series of feasibility studies, including environmental
audits and its financial viability studies.
Kenyan Energy Permanent Secretary, Mr. Patrick Nyoike
says getting guaranteed funding for the power connector
has between a challenging ballgame in the absence
of clear assurances that the Zambian energy authorities
would meet the supply demands.
"We cannot talk about financing until there is adequate
power," Nyoike told East African Business Week in
an interview in Nairobi.
The African Development Bank (AfDB) has expressed
willingness to meet some financial obligations of
the US$670 million project.
The project hopes to raise some 330 kilovolts. The
bank said in a written interview that the Zambia-Tanzania-Kenya
power project was at an advance stage.
Dr. Ini Urua, the Divisional Manager for the New
Partnership for Africa 's Development (NEPAD) at ADB
said the planned power pool was at the financing stage
after the completion of the feasibility studies.
He said the NEPAD division was in the process of
mobilising for funds to assist in the implementation
of the project, which he said has a high potential
for improving regional economic ties for the three
Kenya, Tanzania and Zambia have been negotiating
on modalities of tapping additional electric power
to shore up additional electricity demands in their
In March this year, the three states agreed to set
up a Project Management Unit to oversee the implementation
of the power project and stationed its offices in
The three states have also identified transaction
advisors for the project but minute implementation
details and the doubts expressed by the Kenya authorities
over the power project's generation capacity have
overshadowed these developments.
The project was first mooted in 1999 but has dragged
on over disagreements over the price of power, a fact
which made Kenya to initially withdraw from the project.
Kenya risks an acute electricity shortage as power
consumption and the need to frequently upgrade its
hydropower stations at the Seven Folks scheme puts
pressure on the generation capacity, raising the potential
for power rationing ever higher.
Kenya Electricity Generating Company (KENGEN) Managing
Director Eddy Njoroge confirmed that the government
of Kenya was still pursuing the Zambia-Tanzania inter-connector
but was much more concerned about the supply constraints.
"We are not even sure that the Zambian inter-connector
will meet the demand," Njoroge told East African Business
Week in Nairobi.
Senior accounting officers from the ministries of
energy from the respective participating states have
held a series of meetings to discuss the intricate
details of the project.
The Kenyan energy ministry is also implementing ambitious
rural electrification projects aimed at connecting
more than 120,000 new users every year.
Tanzania, its next-door neighbour which is still
reeling from the after-shocks of a prolonged electric
power rationing caused by rapid economic expansion,
also plans to increase pressure on its national power
grid by connecting additional six million people by
Dar es Salaam hopes to get at least 75,000 new users
on the national grid annually to increase electricity
consumption to 1,100 Megawatts over the next two years.
Zambia is trying its level best to win the backing
of key financiers to put up enough power for sale
to the two countries.
However, Zambia, which has also faced electricity
shortages in the past, hopes to sell its extra power
to the Eastern Africa neighbours, which are facing
possible shortages due to robust economic growth,
which has left Kenya in particular, vulnerable to
Kenyan officials say they would be more comfortable
if the Zambian pool was connected to the South African
pool to guarantee continued supply to both countries.
Zambia has created a new Office for the Promotion
of Private Power Investment (OPPPI) to discuss with
the World Bank over the plans to shore up the country's
electricity generation to meet the demand for power
Zambia's Energy and Water Minister Felix Mutati told
a recent ministerial conference in Livingstone-Zambia's
second city-that plans are underway to increase the
power generation through the expansion of three power
projects in the country.
The Southern Africa state hopes to increase power
distribution by expanding the Lower Kafue Gorge to
produce additional 750 Megawatts.
China has also emerged to save the Zambian power
woes with a promise to inject US$260 million for the
Kariba extension project, which is expected to generate
360 MW. A Chinese firm, Sino Hydro, is still evaluating
the technical proposals for the project.
The ADB, which has been most vocal about the Zambia-Tanzania-Kenya
interconnector, says regional projects are much more
technical to operate and may face constraints, especially
related to management at national levels.
"Regional infrastructure development be it in electricity
interconnection, boundary water resource management
or trans-border transport networks such as road, rail,
maritime, and air transport, is a very complex activity
that transcends all phases of project development,"
He said these projects are complex from early stage
project development through achievement of financing,
delivery of the infrastructure asset, putting in place
the right institutional framework to management the
infrastructure asset, to highlight a few.
"Given limitations on concessional financing window
of the Bank, the Bank has done well in supporting
the design, development and implementation of key
infrastructure projects," Dr Urua added. Development
institutions that support the development and delivery
of infrastructure are usually faced with the issue
of implementation capacity at the country level.
"This is sometimes as a result of the commitment
of recipient countries to the project and sometimes
due to acute shortage of local personnel. Incorporation
of capacity building elements in project design is
often used to ameliorate this," Dr Urua explained.
Kenya's waning interest on the inter-connector might
delay the multinational financing of the project since
NEPAD financiers are keen on projects that go beyond
boundaries of a single state. "Nobody would give you
money to construct a line if you are not sure you
will have power on the same line," Nyoike said.
Kenya is banking on a cost-benefit survey that its
officers are undertaking to finally make the decision
on whether to press on with the regional inter-connection