Kenya to Spend $1.2 Billion on Power Grid by 2014

Oct. 13 (Bloomberg) -- Kenya Electricity Transmission Co., the state-owned power-grid operator, plans to spend $1.2 billion by 2014 expanding the network to import energy from neighboring Ethiopia and provide a link to a wind farm in northern Kenya.

The project will more than double the size of the national grid, Joel Kiilu, chief executive officer of Ketraco, said in an interview from Nairobi, the capital, yesterday.

“The capital requirements and planning required to build transmission lines as demand increases is massive,” Kiilu said.

Ketraco was created by Kenya’s government in December 2008 to build and maintain electricity-transmission lines as East Africa’s biggest economy looks for ways to expand the power grid to more rural areas. The company took over the job from Kenya Power and Lighting Co., the monopoly distributor that still controls 3,400 kilometers (2,113 miles) of power lines built before Ketraco was set up.

Kenya, with a population of 39 million, aims to increase installed power capacity by almost nine-fold to 9,000 megawatts over the next 20 years, while targeting annual economic growth of 10 percent. The government is forecasting growth of at least 4.5 percent this year.

South Africa, the continent’s biggest economy, has the capacity to generate about 40,000 megawatts.

Share Drop

Shares in Kenya Electricity Generating Co. Ltd., the country’s biggest power producer, fell the most in more than three months today after saying profit in the year through June dropped 5.3 percent.

The shares shed 1 shilling, or 5.7 percent, to 16.4 shillings as of 2:35 p.m. in Nairobi, the biggest intra-day drop since June 4.

Profit fell after two years of low rainfall reduced levels in dams that provide Kenya with about 65 percent of its generating capacity, leading to scheduled power cuts between August and October 2009.

Under the expansion plan, Kalpataru Power Transmission Ltd. of India has a contract to build 450 kilometers of 400-kilovolt and 220-kilovolt power lines. The cables will transmit power from diesel-fed generators being installed around the port city of Mombasa to Nairobi, Kiilu said. The total cost of the project, which includes two sub-stations, is 100 million euros ($138 million,) he said.

The construction of a 500-kilovolt, 1,060-kilometer power line linking Ethiopia with Kenya, as well as a 430-kilometer link between the planned 300-megawatt Turkana Wind Farm and the town of Suswa, about 100 kilometers northwest of Nairobi, should be completed by the end of 2013, said Kiilu.

Kenya is in talks with Ethiopia to import as much as 500 megawatts of electricity, Mekuria Lemma, head of strategic management at the state-owned Ethiopian Electric Power Corp., said on July 15. Ethiopia has Africa’s second-biggest potential to exploit hydropower, after the Democratic Republic of Congo, with the capacity to generate 45,000 megawatts, according to the World Bank.

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.