20100602
Reuters

An increasing number of Kenyan companies plan to start generating their own electricity to help lower power costs, improve reliability of supply and add new sources of revenue.

Kaluworks, Kenya Petroleum Refineries and Unilever Kenya Tea are the three latest firms to lodge applications for licences with the Energy Regulatory Commission. They plan to put up plants to generate at least 109 MW.

Cement manufacturers Athi River Mining and East African Portland Cement have announced plans for a coal plant that include the recycling of waste heat from its clinker furnaces.

"Cost of power has become a major concern for every industry, and we don't see the cost of power coming down. So most people who can afford to produce their own electricity are actually going for it," said Vimal Shah, chairman of the Kenya Association of Manufacturers.

"We would encourage it," he added.

Kenya often suffers power cuts, a situation that was exacerbated last year when drought slashed hydroelectricity generation, the main source of power.

The biggest supplier to east Africa's biggest economy is Kenya Electricity Generating Company (KenGen), which makes about 1,000 MW of electricity -- 80 percent of Kenyan demand -- with 700 MW of the total from dams.

The rest is from geothermal and diesel-powered plants.

The government says Kenyan industries pay $0.19 per kWh while Egyptian factories, for instance, pay only $0.05.

The World Bank said in late May the gap between the supply and demand of electricity had risen in recent years due to strong economic growth and inadequate investment in the sector.

Cement manufacturers say electricity makes up about 40 percent of their costs.

An affiliate of Kaluworks plans to generate 100 MW using various materials such as biogas, waste bagasse from sugar mills or biofuel derivative from wood chips for the aluminium rolling company near the coastal town of Mombasa.

Kenya Petroleum Refineries plans to put up a 9.2 MW plant running on heavy fuel oil in Mombasa.

Tea producer Unilever has applied for a licence to produce a yet-to-be-specified amount from a hydrodam, to be distributed in its estates in western Kenya.

Any surplus will be sold to Kenya Power and Lighting Compny, the sole electricity distributor.

Among firms already generating their own electricity are Mumias Sugar Company, which uses 4 MW out of 34.2 MW produced from cogeneration. It sells the surplus to KPLC.

Kenya Tea Development Agency (KTDA), the biggest producer of tea leaf in the country, also said last year it planned to generate 22 MW of its own electricity.