Solomon, Having moved from Science & Technology (under Ministry of Higher Education, Science and Technology) to Nuclear Electricity Project (under Ministry of Energy) there are some perceptions that the PS of Information & Communication have that needs further interrogating. While working outside Kenya (1998 to 2006) I was privileged to visit many countries that operated nuclear power plants for electricity generation and will share experiences from a few. In France the energy giant is called EDF.see http://france.edf.com/france-45634.html It is like combining Kenya Power (distributors), KETRACO (transmitters), KenGen (generators) and a myriad of others e.g. Nuclear Electricity Project, Geothermal Development Co, Rural Electrification, etc. EDF owns power stations (58 nuclear power plants, coal and gas power generators, hydro power stations). EDF also owns the transmission lines (for both high and low voltages) and EDF is also a great marketer (sells electricity to over 30 million customers in France and over 25 million outside France). Yet the government of France owns the lion share in EDF. What we call here Independent Power Producers are insignificant in France. In fact the regulators, who for example control the nuclear power infrastructure (called the French Nuclear Safety Authority see http://www.french-nuclear-safety.fr/ ) has only 5 Commissioners (2 selected by the President, 1 by the Prime Minister –the French have a system whereby the losing party produces the prime Minister – one by the equivalent of COTU, one by the professional in the nuclear industry). This is similar to USA where Nuclear Regulatory Commission also has 5 Commissioners, 3 chosen by the party in power and 2 by the losing party. In both France and USA nuclear is therefore a national matter and is not reduced to part politics. In USA by contrast what we call here IPP reign supreme. In nuclear for example some equivalents of our Tana and Arthi River Develoment Authority, Kerio Valley Authority I;e; Tennesse Valley Authority own both hydro and nuclear power plants. Municipalities too own power companies. So too do equivalents of IPPs here. Different entities also own transmission and distribution lines. What is in USA is more of an exception and not the rule. The rules/laws in USA for example would not tolerate a scenario where a serving people’s representative (in Senate or Congress) would be a wanted person for deals done when s/he was a Secretary (of State, Energy, Treasury etc.) and a former MD (President in USA energy firm) would be ‘respectable’ public figures after questions bordering on criminality arise. Most of the world (Russia, China, Japan, South Korea, Iran, Egypt, etc.) the government irrespective of the party in power plays a very visible role in energy generation, transmission, distribution and marketing. In Egypt for example electricity is cheaper for manufacturers (hence fruits grown in Egypt by irrigation using electricity to pump water from the nile to orchards are cheaper in Kenya than our own locally produced fruits with rain fed agriculture!) and heavily subsidized for the population so as to ensure 98% electrification (Kenya we are just blow 20% while in Hungary upto year 1999 every human habitation it was the duty of the government to connect it with electricity that costs less than kshs. 40 per month for the dweller then irrespective of consumption). Hansard has a report with the following in it. The Energy Act 2006 removes monopoly of Kenya Power as distributor. The Committee on Energy, Communications and Information was constituted on June 17th 2009 and its membership is as follows:- 1. The Hon. (Eng.) James Rege, M.P. Chairman 2. The Hon. Maina Kamau, M.P Vice Chairman 3. The Hon. Danson Mwazo Mwakulegwa, M.P 4. The Hon. Mohamed Hussein Ali, M.P 5. The Hon. (Eng.) Nicholas Gumbo, M.P 6. The Hon. Edwin O. Yinda, M.P 7. The Hon. Emilio Kathuri, M.P 8. The Hon. Ekwee Ethuro ,M.P 9. The Hon. (Prof.) Phillip Kaloki, M.P 10. The Hon. Cyprian Omolo, M.P The Committee is mandated to consider:- • Development, production, maintenance and regulation of Energy. • Communication. • Information. • Broadcasting, and • Information Communications Technology (ICT) development. The Committee executes its mandate in accordance with the provisions of Standing Order 198 (3), which is – a) to investigate, inquire into, and report on all matters relating to the mandate, management, activities, administration, operations and estimates of the assigned Ministries and Departments; b) to Study the programme and policy objectives on Ministries and Departments and the effectiveness of the implementation; c) to Study and review all legislation referred to it; d) to study, assess and analyze the relative success of the Ministries and departments as measured by the results obtained as compared with their stated objectives; e) to investigate and enquire into all matters relating to the assigned Ministries and departments as they may deem necessary, and as may be referred to them by the House or a Minister; and f) to make reports and recommendations to the House as often as possible, including recommendation of proposed legislation. Further, Standing Order No. 152 provide that:- (1) Upon being laid before the National Assembly, the Annual Estimates shall stand committed to the respective Departmental Committees according to their mandates. (2) Each Departmental Committee shall consider, discuss and review the Estimates committed to it under this standing order and submit its report thereon to the House within twenty one days after they were first laid before the House. Ministries assigned In executing its oversight mandate the Committee oversees the following Ministries:- i) Ministry of Energy ii) Ministry of Information and Communications. On Wednesday14th April, 2010 during the Afternoon Sitting, the Member of Parliament for Mumias Constituency, Hon. Benjamin Washiali asked the Ministry of Energy the following Question by Private Notice. a. What is the relationship between Kenya Power and Lighting Company (KPLC) and Rural Electrification Authority (REA)? b. How much money has the Ministry paid to KPLC through REA since its inception to date? c. Could the Minister provide details of the amount paid as dividends to the major shareholders of KPLC since its privatization? In addition to this Question, the Member for Yatta, Hon. Charles Kilonzo had on Tuesday 16th March, 2010 asked a Question on overcharging of electricity consumers by KPLC. The two questions elicited a lot of interest from Members who sought to know whether KPLC is a parastatal or a private company, its shareholders, whether it receives funding or financial support from the Government, its working relationship with REA, the amount of dividends it had paid to its shareholders over time and other issues surrounding its ownership and management. As a result, on 14th April, 2010, the Speaker directed that the Departmental Committee on Energy, Communication and Information should take up this matter and file a report in the House. KPLC is a public company that was incorporated in 1922 as a private company and was later listed in the NSE in 1954. On diverse dates between 1960 and 1975, the government bought KPLC shares totaling to 32,853,268 which represents 40.4% of the voting shares of the Company. It is responsible for transmission, distribution and retail supply of electrical energy to end users. It purchases power in bulk from KenGen and the IPPs through bilateral contracts or Power Purchase Agreements (PPAs) approved by ERC. KPLC is responsible for ensuring that there is adequate line capacity to maintain supply and quality of electricity across the country. The interconnected network of transmission and distribution lines covers about 41,486 kilometers. It has more than 1,500,000 customers who consumed over 5,432 Gigawatt hours of electricity in the financial year 2008/9. During the year, the maximum daily electricity peak demand recorded was 1,072 MW. The Energy Act and the Sessional Paper No. 4 of 2004 on Energy widely liberalized the energy sector in the country which was started in 1997 when KenGen was formed out of KPLC. The Policy Paper among others established a single energy regulator and unbundled KPLC to form KETRACO, REA and GDC. KPLC is the only licensed supplier, distributor and retailer of electrical energy in Kenya KPLC is a single buyer for all the power generated in Kenya and injected into the interconnected grid for sale to the consumers. The trading arrangements between KPLC and each of the generators are governed by a long-term Power Purchase Agreement (PPA) approved by ERC. Such PPAs comprise capacity charge, energy charge, fuel pass through and inflation indexed clauses. The retail tariff structure comprises of a fixed charge, energy charge and capacity charge. On Wednesday 14th April, 2010, while answering a Question by Private Notice by Hon. B. Washiali, the Assistant Minister for Energy, Hon. M.M. Mohamud was not clear on whether KPLC is a parastatal or not. At one point he informed the House that KPLC was a private company with the Government as one of the shareholders. At another point, he informed the House that ‘…KPLC is a Government parastatal, but a different parastatal from other parastatals. It is in a different category with other parastatals. There are parastatals which are not listed at the NSE. So this is different to that extent.’ The Government needs to be clear on whether KPLC is a Government Parastatal or a private company. The Committee notes the importance of KPLC to service delivery in the country and that the achievement of Vision 2030 depends on the success of the electricity sector. It is evident that the Government largely supports KPLC through guaranteed loans and profit plough-backs and also appoints a majority of directors to the company’s Board of Directors. Further, the Company’s vehicles have blue registration number plates, a preserve of parastatals contributing to the uncertainty as to whether KPLC is a parastatal or a private company. Due to the importance of the electricity sector in the country and the regular support offered to KPLC, the Government should not allow KPLC to be in the control of business people who are motivated by profits at the expense of the citizens. KPLC could be termed a State Corporation if it was ‘wholly owned or controlled by the government or by a state corporation’ in accordance with the definition proffered in the State Corporations Act. Following the disposal of shares by NSSF, the Company does not meet the requirements stipulated for it to qualify as a state corporation. Furthermore, KPLC has not submitted fully to the provisions of the Public Audit Act, by having its accounts audited by the Controller and Auditor General and submitted to the National Assembly for examination by the Public Investments Committee (PIC). he Controller and Auditor General last submitted audited accounts for KPLC for the year 2001/2002. PIC queried the non submission of KPLC accounts for the subsequent years in its 12th Report of 2004. Thereafter, accounts for the financial year 2007/2008 were tabled in December 2009. That notwithstanding, in 2004 PIC examined the following non accounting issues:- i) KPLC’s pension’s scheme, ii) Contracts between KPLC and IPPs, iii) The general financial status of the company and iv) Supply of treated poles during the Financial year 2004/2005 (13th Report). The Committee therefore recommends that:- i) The Government proceeds with the conversion of some of its 7.85% redeemable non-cumulative preference shares (87.12 million shares which Treasury has approved) into ordinary shares at a ratio of 1:1 and retains the ordinary shares so as to raise its stake in KPLC to 75% thus qualifying the company as a parastatal. The Government’s shareholding in KPLC be determined by the shares held in the name of the Permanent Secretary, Treasury and not other state agencies who might later on dispose their shares without approval from the Treasury. Before unbundling of electricity generation from transmission and distribution in the 1990s, there were 5 major players in the power sector, namely Kenya Power Company (KPC), Tana River Development Company (TRDC), Tana and Athi Rivers Development Authority (TARDA), Kerio Valley Development Authority (KVDA) and KPLC. The initial unbundling comprised first merging TRDC and KPC in 1996 to KPC which changed its name to KenGen in 1998. The second step comprised consolidating all the power generation assets, owned by the five (5) parastatals under KenGen and the transmission and distribution assets under KPLC. By October 1999, all power generation assets from KPLC, TRDC, KPC, TARDA and KVDA were transferred to KenGen at ‘depreciated replacement costs’. Similarly, transmission and distribution assets owned by other entities were transferred to KPLC at depreciated replacement costs. The Committee recommends that, like the previous unbundling:- i) All assets under the REP since 1973 should be tracked and taken over and reflected in the books of REA. Currently such assets are owned by the Government but under KPLC. ii) All transmission assets should be tracked and taken over and reflected in the books of KETRACO. Currently such assets acquired before the formation of KETRACO in 2008, are owned by KPLC while KETRACO will own new assets that it will develop. KPLC should surrender all transmission assets to KETRACO. iii) All assets under geothermal exploration and extraction held by KenGen (including Olkaria I & II) should be taken over by GDC to avoid the Government competing with itself. The Committee notes that ERC has failed to deliver on its mandate especially with regards to protecting energy consumers. This is reflected in the high costs of electricity in Kenya as compared to its neighbours which is a key factor in driving investors out of the country. Further, the high electricity costs cause most Kenyans to resort to traditional sources of energy such as charcoal and firewood, further depleting our environment. While unbundling the electricity sub-sector, the Government intended to make the electricity clean, quality and affordable which is evidently not the case. The Committee also notes with concern that under the Energy Act, ERC is expected to ensure that the industry players such as KenGen remain profitable and viable which impacts negatively on the consumers despite the PPAs guaranteeing reasonable profits. The Committee therefore recommends that the Energy Act be amended and that ERC puts in place feedback mechanisms to ensure that demand is met with reliable, cost effective and high quality energy services in an environmentally friendly manner. The Committee further recommends that the Government increase its subsidies for the transmission and operation costs so that they are not reflected in the tariffs and the consumer bills. The Committee notes that the public is misinformed on the operations of the various players in the power sector and recommends that the Government carry out public education to inform the public on the various initiatives and power players which will promote transparency in the energy sector. Further, the price variations reflected on the consumer bills should be demystified to the public. In conclusion what PS, Ministry of Information and Communications raises i.e. inviting Hon Rege who is Chairman of Energy and Information & Communication to shed light on how the Committees recommendations have been taken up by the relevant institutions. In conclusion and as noted in some earlier debate, energy is an enabler and the current situation is not sustainable i.e. Kenya is dominated by petroleum and electricity which are the prime movers of the modern sector economy, while wood fuel provides energy needs of the traditional sector including rural communities and urban poor. At the national level, wood fuel and other biomass account for about 68% of the total primary energy consumption followed by petroleum at 22%, electricity at 9% and others including coal at about less than 1%. This is not sustainable as electricity providing less than 10% of energy yet we plan to industrialize! The October 2011 National Energy Conference revealed that even the 20+% oli bill almost 10% goes to burn in diesel generators to produce the expensive fuel levy reflected in electricity bills. While making Dr. Ndemo play Presidential aspirant it was concluded that while electricity has the least Cost Power Development Plan team doing 20 year rolling plans no such activity is in the oil sector! Is that by design or its a long term oversight? Wood (read biomass) never got any country on earth industrialized and hence government cannot (should not) wait for Independent Power Producers to invest in energy, as the easiest return (short term of course) is in charcoal burning, followed by burning oil (again returns occur in less than a Parliamentary term) not putting up a nuclear power plant. Best wishes for 2012 to all. David On 12/31/11, Solomon Mbũrũ Kamau <solo.mburu@gmail.com> wrote:
Dr. Ndemo, With due respect, I find your comment on listers' popints to Mr. Mugo not satisfying (to your expectations). However, in the foregoing, I understand that most of us were not privy to the conception of the Vision 2030, and perhaps, we were raisin issues per what we see happening, for example on energy. Kenya Power as a monopoly enjoys 100% benefit in the power sector, yet in the ccompetitive and liberalized world, competition thrives when the market is not capped on one firm. Kenya Power, while being good in blackouts, stills enjoys support from the government, yet as we speak about achieving the Vision, energy is the most important aspect driving us towards the realization of the flashship projects pointed out. Generally, without education, there is nothing like achieving development in it's full scale.
In my view, I think the contributors interrogating Mr. Mugo did their level best to make the Vision clear in a layman language, more sepcifically, Mr. Mugo himself.
Regards,
Solomon
On 31/12/2011, bitange@jambo.co.ke <bitange@jambo.co.ke> wrote:
Eric, I am not done with your questions yet. On Government blocking investment in energy. This is what we are trying to address: The role of government in enterprise. If you go deeper into Schumpeter's theory, you will find that no government can block an idea or innovation whose time has come.
When Graham Bell invented the telephone, the British Post dismissed the idea saying there were enough messengers around. With the invention of mobile telephony, the land line is undergoing the same fate it brought to communication early in the 20th century. This is what is called "creative destruction".
We must understand this theory if indeed we want to survive in the days to come. In my recent visit to China, I saw what the future would be like. A city the size of Nairobi is using both solar and wind energy to light up street lights. This innovation even in Kenya does not require government approval. Further we have enriched the Arab world far too long when we use parrafin to power our rudimentally oil lamps. Instead we should by now have provided a simple battery, a solar panel and a micro wind vane to every household for energy supply. This will save us billions of dollars that we can invest in preventive medical care.
Your problem is that you want to replicate what you have seen in advanced economies. Your approach would fail. You must first create the market through simple understandable solutions. The demands for energy will then be incremental such that even if you were to build 10,000 MW you have a ready market.
On colonialism; This is non sense in my view. Those who colonized us are dead and most of those who were colonized are dead too. We must not forget that this happened but our focus should be to build confidence in ourselves to face the world. Take China for example, Japan dominated them but they have not spent their lives grumbling about the past. They have faced up to Japan and today they compete on an equal footing.
Although parts of Africa are still under the French colony, you must be grateful that the British colonized us. The British were only interested in domination and material wealth. The French's integration approach still has implications on their colonies. Indeed as I write there are Africans in Africa who consider themselves French. There are African states that still pay French tax. Mineral resources on African continent still belong to France.
I have nothing against the French. If our Francophone brothers feel comfortable this way, let it be. The best we can do is to face up to our colonial power, leverage on the Common Wealth Association to build a new alliance that benefits all of us. Together we have more voting power and ability to lead the agenda.
Regards.
Ndemo.
Sent from my BlackBerry®
-----Original Message----- From: "Eric M.K Osiakwan" <emko@internetresearch.com.gh> Sender: kictanet-bounces+bitange=jambo.co.ke@lists.kictanet.or.keDate: Fri, 30 Dec 2011 15:51:57 To: <bitange@jambo.co.ke> Cc: KICTAnet ICT Policy Discussions<kictanet@lists.kictanet.or.ke> Subject: [kictanet] Vision 2030: ICT and Other Sectors Converged (Day 3)
_______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet
Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/bitange%40jambo.co.ke
The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications. _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet
Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/solo.mburu%40gmail.com
The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
_______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet
Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/otwomad%40gmail.com
The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.