[2008-06-19]  State adopts proposal to split power company
A new company to be called the Kenya Power Transmission Company (KPTC) will take over the transmission function leaving KPLC with the role of distribution, Energy minister Kiraitu Murungi said yesterday.

“KPLC will be restructured to create a State- owned transmission company and a private sector majority-owned distribution company,” he said.

While the unbundling of KPLC may have significant implications on the company, depending on the model adopted, independent analysts said the company may gain by removing the capital intensive transmission business from its mandate.

The development could leave the current company with relatively fewer assets and probably fewer revenue streams. The basis for transfer of assets and liabilities from KPLC to the transmission entity and the financial impact could not be established yesterday.

This was one of the key items that the consultant — PricewaterhouseCoopers — was to explore when the audit firm was appointed in May 2007 to undertake the study on the separation, called unbundling in technical terms.

The move is meant to aid an open access system through which electricity consumers can buy power directly from electricity generators.

This is in line with planned interconnection of Kenya’s power grid with Ethiopia, Tanzania and other Southern Africa Power Pool countries as well as strengthening the interconnection with Uganda.

The changes are aimed at enhancing market and supply options for both power generation and large consumers. The split entities will be licensed on performance targets set by the Government for transmission and by the electricity regulatory commission for the distributor.

The policy measures are also targeted at addressing the rising needs of electricity in the country. Currently, the country consumes some 1,049 megawatts (MW) of power and the raft of measures are geared at creating efficiency and providing more power.

“A power crisis is looming for Kenya. I am announcing urgent interventions to avert threats arising from challenges of limited electricity supply,” Mr. Murungi told KPLC senior managers.

Two-year contract
The firm that is majority-owned by the Government is gearing up for transition in management as the two-year contract for the Canadian expatriates expires this month.

Starting July 1, Joseph Njoroge, the immediate former KPLC manager in charge of Nairobi region takes over as the firm’s chief executive.

The contract ends on June 30, this year but KPLC chairman Crowther Pepela said the board had granted a one-month extension to the team led by Don Priestman. Last week’s Budget set aside KSH1.75 billion to expand and modernise the transmission system in the next one year.

Yesterday, the ministry also gave a nod to the power company to borrow money from the financial markets and fast-track the targeted one million new power connections in the next one year.

Mr. Murungi also said suppliers to the company who do not perform will be blacklisted and importation of poles stopped in the next seven years, creating a market for local tree growers.

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