KTDA targets Sh5.5Bn loan facility with green energy schemes

KTDA chief executive Lerionka Tiampati(pictured)

By Steve Umidha

 
The Kenya Tea Development Authority (KTDA) is betting on the Sh5.5billion loan facility from International Finance Corporation (IFC) to construct seven small hydropower projects (SHPs) across tea growing regions.

 
KTDA Power Company (KTPC), a subsidiary of KTDA Holdings will develop the projects across the country to power its tea factories with renewable energy as part of the agency’s long-term plan to generate 15 MW of electricity which is expected to reduce huge operational costs the factories sustain periodically.

 
Each of the power plants is expected to have an installed capacity ranging from 1.1megawatts (MW) to 6.5MW.

 
Speaking while signing the agreement, KTDA chief executive Lerionka Tiampati said that each hydro power project will be fully operational in the next two to three years upon completion and will cut down by half the amount of power the agency pays to Kenya Power in terms of tariffs.

 
“Construction of three hydropower projects in Gura, Chania and North Mathioya are at advanced stages, funded by an earlier credit line from AFD. With the funding that we have received today, construction works for Nyambunde, Kiringa, Kipsonoi and Nyamasege SHPs will commence in 2016 and upon completion we hope to reduce our power bills by half,” he said.

 
Individual tea factories spend on average Sh30 million to Sh65 million yearly on electricity, depending on factory size, crop level and the variable costs such as fuel cost adjustment and forex that are used by Kenya Power in the calculation of electricity bills – while KTDA spends up to Sh2billion on power bills.

 
KTDA (Holdings) Chairman, Peter Kanyago confirmed yesterday that the company has already entered into an agreement with Kenya Power- the country’s power distributor to sell excess electricity generated to the national grid at a cost of sh8 cents per unit through a feed-in-tariff programme.

 
“We managed to negotiate with Kenya Power to sell some of the electricity to the national grid at a cost of Sh8 cents per unit,” he said, adding that the SHPs are intended to reduce the cost of energy for each tea factory, which currently forms their single biggest cost component – while in the long run will boost tea earnings for farmers.

 
The additional generation is further expected to boost the country’s current national installed capacity of 2,150MW to the grid with various companies like KenGen, GDC among other independent Power Producers (IPPs)having lined up a mix of other sustainable projects as part of government’s 5,000MW plus program.

 
The Sh5.5 billion credit facility was signed yesterday in partnership with the Global Agriculture and Food Security Program (GAFSP), French Development Institution (Proparco), and the Netherlands Development Finance Company (FMO) and has a repayment term of 10 years with a three year grace period.