Ladies and Gentlemen,
David's well articulated summary herein below on the going's on in the Energy Sector to date ( David I hope you do not mind working on an Energy concept Paper as requested
by the Vision 2030), quite clearly indicates that we are in the woods as we have stated before.
It is imperative that we realize that if we have to bring energy efficiencies to speed and develop & industrialize this economy, electricity has to lead from the front.
It therefore follows that we must streamline the main players – very critical. We cannot tolerate a situation where investors are in full flight citing the high cost of
electricity to set up industry here at home, while neighboring countries can easily accommodate their needs.
I suppose that we can note with satisfaction the efforts being undertaken in electricity generation so far, as earlier assessed. However we have to address the
distribution sector.
For me, I would be keen on three areas:
1. The ‘goings-on’ at the Distributor – KPLC. If whether it is a parastatal, quasi-parastatal or its ownership remains a ‘mystery shroud’ to date, we need to resolve this now. Does this interfere in any way with operational/pricing efficiencies filtering to the consumers? There needs to be transparency with a critical national utility Service provider such as this.. So can the right honorable gentlemen please clear the air on this? Grace.., possibly we could request Hon Rege for comment on this or get on board an active member of the Committee on Energy..?
2. Monopoly – We still insist - Competition breeds competencies. Can we systematically begin working on breaking up the monopoly setup we currently have in place. What happened to the Energy Act 2006 that was to remove monopoly of Kenya Power as distributor …?
3. ERC – Am still yet to fully comprehend the makeup structure/mandate. Can we make it work better – especially, on Electricity/Oil..?
Bw PS, while we may fully agree that Solar energy is a viable alternative am afraid that by our standards here and now, we can only develop some small scale domestic consumption in the short term. This won’t
really make any much dent in KPLC’s side. Meanwhile, we are discussing driving economy /industrial growth in the mid-term/long term for Vision 2030. Electricity has to carry out the job and drive this.
The general concern we all share right now is that, while we are actively scaling up efforts to generate more power to fuel our growth, we might just have to content with a bottleneck distribution, and this is currently only done by KPLC and so far, this state of affairs is quite unsatisfactory.
Harry
-----Original Message-----
From: kictanet-bounces+harry=comtelsys.co.ke@lists.kictanet.or.ke [mailto:kictanet-bounces+harry=comtelsys.co.ke@lists.kictanet.or.ke] On Behalf Of David Otwoma
Sent: Sunday, January 01, 2012 10:35 PM
To: harry@comtelsys.co.ke
Cc: KICTAnet ICT Policy Discussions
Subject: Re: [kictanet] Vision 2030: ICT and Other Sectors Converged (Day 3)
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)
>>
>> _______________________________________________
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>>
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>> 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,
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>> not spam, do not market your wares or qualifications.
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>
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> 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,
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