Mumias wants power deal renegotiated

Mumias Sugar Company wants the Kenya Power Company to revise tariffs in order to enable it benefit from its co-generation plant.

The miller, which has since disconnected power to the national grid following a tussle over tariffs, wants the Government to purchase electricity at market rates rather than what was negotiated when the plant came into existence.

"The power purchase agreement (PPA) was badly negotiated. The company is not making any profit from selling power. We have asked that the tariffs be reviewed upwards to enable us make some headway with the project," Mumias Managing Director Coutts Otolo said in an interview with The Standard.

Mumias generates 36 megawatts of electricity from its bagasse-driven co-generation, part of which is channeled to Kenya Power's national grid.

Mr Otolo said the company also buys electricity from the power firm to jump-start its machines during its maintenance, adding that Kenya Power's charges are double the amount they pay back.

"We sell to Kenya Power at 6 US cents. But we buy power from them when we are on temporary maintenance for about two to three days. But you find they are selling to us at 20 cents. This is not profitable at all," he said.

Domestic tariff

"We want to renegotiate the tariffs to avoid situations where we have to pay so much to Kenya Power," he added.

Mumias has complained that Kenya Power bills it using the domestic tariff, which is often higher than the industrial rate, and now wants the matter re-negotiated.

"We stopped supplying power in January but we are not in a battle with the electricity provider," Otolo said.

Western MPs under the National Assembly Caucus which visited the factory said they are in support of shareholders and the Government's efforts to ensure the factory rises from the ashes.

"We want Mumias to return to its profitable ways. They have announced a rights issue and we will be watching to see whether it will be possible to raise funds from the rights," Nambale MP John Bunyasi said.