Firms at Naivasha industrial park to get lower power tariff

Trade and Co-operatives Peter Munya (right) flanked by founder and CEO of Danish Brewing company Chris White (left).

The government has developed a new power tariff for manufacturers who will set up at the Naivasha Special Economic Zone (SEZ).

The Energy and Petroleum Regulatory Authority (Epra) said industries that will build plants at the industrial park would pay considerably lower electricity charges to encourage growth of the manufacturing sector by improving competitiveness of goods produced locally.

In a report detailing its activities in 2019, Epra said it had developed a special tariff for the Naivasha SEZ as among the accomplishments for 2019 “aimed at reducing the cost of energy”. 

Commercial power users pay between Sh10 and Sh15.60 per unit of electricity, with very heavy industrial power consumers, categorised as C15, paying Sh10.10 while small commercial pay the higher margin.

This basic cost of power is however subjected to other costs including government levies and taxes that tend to push up the cost of power.

While Epra is yet to make public the special tariff for the Naivasha SEZ, it has in the past said it would be significantly lower than the current charges.

The industrial park at Naivasha already has an anchor investor. The Industrialisation ministry in December said that Danish brewer of Turbog and Carlsberg beers plans to invest $45 million (Sh4.5 billion) in a factory in the special economic zone.

The firm will produce Tuborg, Carlsberg, Holsten and Kronenbourg beers, as well as Somersby Cider at the factory.

Access to the SEZ has been made easy by the extension of the standard gauge railway and a Sh6.9 billion inland container depot at Suswa.

The government has recently started prepping the zone for investors and, in April last year, said Sh700 million would be used in building water infrastructure.

The SEZ will be on a 1,000-acre parcel of land of which, the ministry said, 800 acres will have warehousing facilities for various manufacturers, logistics parks and other support services.

The Trade ministry has recently said over 100 investors have expressed interest in setting up at the park.

In the report, Epra also said it has developed an industrial tariff for firms connected at 220 kilovolts, usually heavy electricity consumers.

Generating capacity

It said new power generating capacity added last year has increased the amount that electricity producers can generate to 2,819 megawatts as of December 2019.  This is against 2 700MW in 2018.

Commissioning of the Olkaria 5 units I and II with a combined capacity of 158MW as well as the Lake Turkana Wind Power plant with a capacity to produce 310MW that started operations in late 2018 and the Garissa Power plant with a capacity of 50MW contributed to the growth in installed capacity.

Peak demand rose to 1,912MW, up from 1,800MW in 2018. When the peak demand is compared with the installed capacity (2,819MW), there is excess power of 907MW, or about 32 per cent of the installed capacity. This is higher than the globally recommended reserve margin of about 15 per cent.

Such a reserve is used whenever a power plant is down due to routine maintenance or emergency.

When the excess is high, it could play a part in sustaining high power prices.