Sugarbelt region loses industrial steam as power usage drops

Mumias Sugar Company. [Nathan Ochunge, Standard]

The closure and scaling down of large companies operating in western Kenya as well as constrained power supply to the region has over the last decade resulted in a sharp drop in power consumption. 

State-owned sugar millers and the Panpaper mills are among the companies that have either shut down or significantly slowed down on their processes.

Data on power consumption by both Kenya Power and the Kenya National Bureau of Statistics (KNBS) show a sharp drop over the years, a trend that if not reversed could very well see the region miss out on benefiting from the government’s Big Four Agenda, which has manufacturing among its key pillars.

Consumption of electricity in the region peaked in the 2013/14 financial year when domestic and commercial customers bought a total of 1.12 billion kilowatt-hours of electricity, according to KNBS data.

This would however drop sharply in the following year, with electricity sales to consumers in the region reaching 525 million units (kWh).

It reached a low of 368 million units over the 2015/16 financial year but has since started to make some recovery. This has however been slow, with the amount of power sold to the region by Kenya Power standing at 395 million units over the year to June 2021.

There has been a major drop in consumption within the Commercial and Industrial 1 (CI1) category of consumers, who are fairly large companies metred at 415 volts. Power consumption for this category of customers in Western Kenya has dropped to 65 million units as of June 2021. This is a reduction of more than 50 per cent from 149 million units consumed over the 2014/15 financial year.

The CI1 firms typically have a monthly consumption of over 15,000 units of electricity. Most of the large companies categorised as commercial and industrial fall under this category and numbered about 2,900 as at June 2021, according to Kenya Power’s annual report.

It is the case across the other commercial and industrial customer categories, where for instance CI5 category consumed 17 million units of power in the year to June 2021. This is down from 84 million units in the year to June 2015. The CI5 is the category for the very large power consumers who are metred at 132 kilovolts (KV).

Despite the drop in consumption, the number of consumers in the region have gone up significantly increasing to 512,000 as of June 2021 from doubling from 265,700 in year to June 2016. This has been due to aggressive increase in electricity connections among domestic consumers over the last decade as the government pushes for universal power.

Among the factors that have resulted in low consumption of electricity in Western Kenya include the closure or slowdown of major companies over time.

Other than having been big consumers themselves, companies such as sugar millers and the Webuye Paper Mills, attracted a host of businesses that contributed to high power consumption. These businesses have either shut down or are a shadow of their former selves.

The Webuye Paper Mills, which collapsed due to heavy debts, was a force to reckon with in its heyday and was easily behind the rise of Webuye as an industrial town and with the mills out the picture, the decline of the town.

Following its closure, other businesses that also had a role in making Webuye town tick found it hard to continue thriving, with many of the business people closing shop and relocating to other areas including North Rift.

Webuye Paper Mills was in 2016 privatised when Rai family bought the firm for Sh900 million. This has so far not reversed the fortunes of the town. The company, which now operates as Rai Paper, was expected to, over time, return to its former glory with the Rai family saying it would pump in Sh6 billion over five to 10 years. It was expected that with time, it would create 1,500 jobs.

Four of the five sugar millers owned by the government are located in close proximity in the Western Kenya region. The companies have over the years seen their production decline, the most visible perhaps being Mumias Sugar Company that was in 2019 placed under receivership.

The decline over the years is seen in the environs around the sugar millers, with their descent seen in the neighbouring towns, where the economic activity has mirrored the decline that the sugar industry has experienced.

"Governance issues have contributed to inefficiencies across the sugarcane value chain but more so sugar milling establishments. Most of the state-owned sugar mills are operating below capacity and are burdened by huge debt,” said the Kenya Association of Manufacturers May 2021 report on the sugar sub-sector.

"Inefficient, poorly maintained machinery, which suffer frequent breakdowns further aggravate the production capacity and quality of the mills. As a result, most millers and out-grower farms have problems operating efficiently and profitably on a sustainable basis with most of them returning recurrent losses."

Other than the collapse of major firms, another factor that has resulted in low consumption of electricity in Western Kenya has been constrained power supply to the region over the years.

The Ministry of Energy has in the past noted that while the country can produce enough power to meet the current demand in the country, it cannot transmit the same electricity to some parts of the country due to lack of transmission lines.

In the case of Western Kenya, the transmission line to evacuate power from geothermal fields at Olkaria has been one that is aged and there were fears that if used, the amount of power transmission losses would be much higher and in turn make the power costlier.

A new line expected to replace the dilapidated one faced major delays. The Olkaria-Lessos-Kisumu 400kV transmission line, which is being built by the Kenya Electricity Transmission Company (Ketraco), was initially scheduled for completion in 2018 but was only completed in 2021.

The Energy Ministry has in the past told Parliament’s committee on energy that Kenya Power has over the years had to implement a power rationing programme of sorts to the region. This has resulted in different parts going without power for hours on given days every week so that the company can supply the other parts of the region with stable power.

The region has in the past had to rely on a thermal plant at Muhoroni, imports from Uganda as well as Sondu Miriu and Turkwel hydro power plants. The latter two are unreliable due to low installed capacity and dependency on rains.