NAIROBI, Kenya- The Kenya Electricity Transmission Company (KETRACO) is in the final stages of negotiations with Adani Energy Solutions and Africa50 for a major infrastructure project: constructing a 625-kilometer high-voltage transmission line.
This project could be a game-changer for Kenya’s electricity transmission, but it might come with an increase in electricity tariffs to cover the 30-year loan from these private investors.
This potential deal comes amid growing concerns over the stability of Kenya’s power grid. Just this month, the country faced three widespread power outages after a critical transmission line in Suswa tripped, disrupting the evacuation of 200MW of power from Ethiopia.
Energy Cabinet Secretary Opiyo Wandayi pointed to aging infrastructure and a lack of investment in transmission as key culprits for these blackouts.
To tackle these ongoing issues, KETRACO has unveiled a more extensive plan. The company is looking to raise $5 billion through public-private partnerships to revamp and expand Kenya’s transmission network by an additional 10,000 kilometers.
This expansion aims to address technical losses that have plagued the power sector.
Two major players, Adani Energy Solutions and Africa50, are now under consideration to take the lead in developing and managing this ambitious transmission line for the next three decades. Although negotiations are ongoing, both companies have submitted detailed proposals.
Adani’s pitch involves constructing 388 kilometers of transmission lines and substations at a cost of Ksh 94.4 billion, featuring a coupon rate of 9.5pc.
Africa50, on the other hand, is also vying to build the same distance of lines through a privately initiated proposal. While the terms are still under review, KETRACO seems optimistic that either option could significantly boost the country’s power transmission capabilities.
To service the 30-year loan from these private companies, KETRACO is proposing an increase in electricity tariffs. While the idea is likely to raise eyebrows, it’s positioned as a necessary step to fund the critical infrastructure upgrades and ensure a more reliable power supply.
The question is, will Kenyans be willing to pay more for electricity in exchange for improved grid reliability and reduced outages?
In the context of the ongoing power outages and infrastructure issues, KETRACO’s plans seem like a bold attempt to modernize Kenya’s electricity network. However, it remains to be seen how the proposed tariff hike will be received by consumers.
KETRACO’s potential deal with Adani Energy Solutions and Africa50 could mark a significant shift in Kenya’s energy landscape.
The proposed expansion could address pressing power reliability issues, but it comes with financial strings attached. As negotiations continue, the balance between upgrading infrastructure and keeping electricity costs manageable for Kenyans will be crucial.
