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Your days are numbered, power generators told

By | Apr 25th 2009 | 2 min read

By John Njiraini

Independent power producers (IPPs) that generate electricity by burning diesel have been put on notice.

Energy Assistant Minister Mohamed Maalim said the IPPs should explore cheaper ways of power generation to reduce the high cost of electricty.

"IPPs that generate electricity from diesel have a short future because they drive up the cost of electricity," said Maalim.

With the cost of crude oil at the international market continuing to be unpredictable, the Government is concerned the price of electricity would rise further as long as the country depended of diesel burning to generate power.

Speaking at the Institution of Engineers of Kenya conference, Mohamud added the Government is discouraging investment in IPPs that burn diesel to generate electricity.

But Tsavo Power Chief Executive Julius Riungu told The Standard on Saturday that IPPs would continue to exist as long as demand outstrips supply and hydro generation continues to be constrained by unpredictable weather. "We need quick energy to meet demand, and as long as there is no alternative, IPPs will be our only solution," he said.

Last year the cost of electricity shot up by an average of 24 per cent following a surge of crude oil prices that soared to an all time high of $148 per barrel in June.

Exorbitant prices

Though the price of crude oil has since collapsed to $48 per barrel, Kenyans and manufacturers continue to pay exorbitantly for electricity.

A 35 per cent reduction announced last October after the Government reduce Value Added Tax on electricity, industrial fuel, residual fuel oils and heavy fuel oil from 16 per cent to 12 per cent seems to have hard minimal impacts. Currently there are three main thermal IPPs. Aggreko, the largest, produces 100MW and consumes a total of 18 million litres of diesel each month.

Others are Tsavo that produces 74MW and Iberafrica with 56 MW and is currently putting up another plant with an installed capacity of 50MW.

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