In 2005, countries in the wider East African region launched a master plan that would finally sort out the region’s perennial power woes.
The East African Power Pool (EAPP) was to exploit the enormous hydropower potential in the Democratic Republic of Congo, Ethiopia and Uganda, the geothermal potential in Kenya, Tanzania and Ethiopia, natural gas in Tanzania and Rwanda and coal in Tanzania and the DR Congo. Six years later, the region’s power troubles seem to be going from bad to worse — Kenya this week joined Tanzania and Uganda in the growing list of East African Community countries rationing power to domestic and industrial consumers.
EAC Secretary-General Dr Richard Sezibera is a worried man. He says the Community does not yet have a framework where partner states or their power utilities can pool resources to invest in a project geographically located in another partner state.
“Like other infrastructure projects, power projects are capital intensive and this poses a big challenge in the mobilisation of resources,” said the secretary- general.
Partner states have been unable to match investment in the sector with the rising demand for electricity, which is currently growing at around seven per cent every year.
Energy experts maintain the remedy to the perennial power problem, which threatens efforts to transform the EAC into a middle level economy, is to implement the East African Power Pool project.
“There would have been no power crisis in the region if the EAPP project were complete and operating as per the master plan,” says Joel Kiilu, managing director of the Kenya Electricity Transmission Company (Ketraco), the company mandated to build and maintain new transmission lines.
In fact, under the regional power trade region envisioned by the EAPP, a few large exporting countries would serve many power importers, taking advantage of economies of scale. The DR Congo and Ethiopia were identified as the major hydropower exporters. Uganda was also expected to be a net power exporter, along with Tanzania, Rwanda and Sudan, and possibly South Sudan. Kenya, Egypt and Burundi were to be net power importers.
The EAPP, in other words, was to create a closed-circuit system in which power would move from the surplus to the deficit areas via high voltage cross-border transmission lines.
The EAPP has 9 members after the troubled North African country of Libya joined the EAPP early this year. The other members are Egypt, Ethiopia, Kenya, Rwanda, Burundi, DR Congo, Tanzania and Sudan. Uganda is expected to join. Newly independent South Sudan is expected to apply for membership.
The grand project was to fully exploit the hydropower potential in the DR Congo, which remains unmatched on the continent. The planned Grand Inga dam complex on the Congo River, for example, would allow it to generate up to 44GW, twice as much as China’s Three Gorges dam and enough to supply 40 per cent of all Africa’s needs from Cairo to the Cape of Good Hope.
Executive secretary of East African Power Pool Jasper Oduor concurs with Dr Sezibera’s sentiments, saying the delay is partly due to financial constraints experienced by member countries.
“We have to look for alternative financing — bring in the private sector, donors and independent power producers,” Mr Oduor adds.
The official says the World Bank, the African Development Bank (AfDB) and Agence Francaise du Developpment (AFD) are the major finance partners for the EAPP project.
“AfDB and the Common Market for East and Southern Africa (Comesa) are working with us to attract investors to the project. We’ve already had pledges made, and the World Bank says that they are willing to step in and meet the shortfall,” Mr Oduor says.
A 2011 report by Africa Infrastructure Country Diagnostics (AICD) states that the EAPP/Nile Basin region has minimal refurbishment needs but requires 23,000 MW of new capacity —approximately equal to the total installed capacity in 2005. This is because demand for electricity in the region is growing at an estimated 5.3 per cent per year, but power supply companies have been unable to keep pace with the demand.
In addition, ambitious national targets for electricity access have pushed the demand even further. In Kenya, for example, 48 per cent of urban and only 4 per cent of rural households are currently connected to the grid, but the country hopes to step this up to 100 per cent urban connectivity and 32 per cent rural by 2015.
Expanding the generation system over 10 years, according to AICD, is expected to cost more than $29 billion, almost all of which will have to go to investment in new capacity. The costs of transmission, distribution and connection total $11 billion, of which investments in the grid account for $7.5 billion. The cost of connecting new customers is $3 billion, or 40 per cent of the total grid investment. Rural areas are expected to account for 80 per cent of these new connections, as the EAC’s rural access to electricity currently averages a mere 3 per cent. Refurbishment of the existing grid requires $3.3 billion.
This brings the total overnight investment costs in the EAPP/Nile Basin to $54 billion, translating into spending of $5.3 billion every year for a decade: $4 billion for generation capacity and $1.3 billion for transmission, distribution and connection.
Furthermore, meeting national targets requires $24 billion more in investment compared with the maintaining access as it is at present, or approximately $3 billion every year. The largest contributors to the increase are the costs of transmission and connection. Connecting new households to the grid accounts for $20 billion, or $2.4 billion every year of the additional costs.
Last week, Kenya Power managing director Joseph Njoroge released a countrywide power rationing schedule, due to a shortfall of between 70MW and 90MW.
The power cuts come at the most inopportune time for the company, hot on the heels of a major re-branding dubbed “Mwelekeo Mpya” (a new direction). Industry analysts say that the blackouts will do little to build Kenya Power’s image in consumers’ mind. The company was formerly known as Kenya Power and Lighting Company.
Uganda and Tanzania will also have to put up with prolonged rationing as their governments desperately try to either clear debts owed to independent power producers or acquire new generators.
In Uganda, for example, the crisis is expected to ease only after the first 50MW of Bujagali hydropower project begins operation. Bujagali is expected to generate 250MW on completion next April.
Tanzania is also struggling to plug the supply gap and the situation has been worsened by the placing of the Independent Power Tanzania Company under receivership by the High Court. Frequent breakdowns in its major hydropower plants have also plunged the country into long hours of darkness.
Rwanda is also trying to bridge its widening energy deficit, which is already putting pressure on its fledging economy. Rwanda’s installed capacity is 64.55MW (local) and it imports 14.5MW, making a total capacity of 79MW.
The cost of energy in the landlocked country is already on the rise, costing $0.22 per KWh compared with $0.08-$0.10 in the rest of the region, according to World Bank figures.
The AICD report shows that regional trade in power, if adequately exploited, could plug the energy deficit, saving the region up to $1 billion a year, as well as reduce emissions of carbon dioxide by up to 4 million tonnes, as countries rely less on diesel powered generators. Climate change has hit the region hard, with droughts becoming more frequent and lasting longer — the report highlights that for the EAPP region, a 25 per cent reduction in rainfall typically raises power costs by 9 per cent.
According to Mr Kiilu, EAPP is working on three major interconnection power projects.
The first is the Eastern Africa Interconnection, also referred to as the Ethiopia-Kenya line, which Mr Kiilu says is on course. An environmental and social impact assessment has already been done on the proposed route for the line.
“A detailed design has also been done. We are now looking for a contractor to begin working next year,” he adds. The 500 Kilovolt (KV) line is expected to be completed in the next three to four years at a cost of about $800 million.
Ethiopia’s energy, largely hydropower, is among the cheapest in the region and the EAC countries will benefit tremendously as the cost of energy in the region, one of the highest on the continent, is expected to decline after the completion of the project.
“If we had the Ethiopia-Kenya line ready by now, power rationing would have been unthinkable,” adds Mr Kiilu. Ethiopia added 420MW of power to its grid with the completion of the Gigel Gibe II hydropower plant, inaugurated in 2009.
The second is the Kenya-Tanzania-Zambia, or the Z-T-K line, expected to be one of the longest. A Canadian firm, RSW, is doing feasibility studies, funded by the Norwegian government.
“The studies are almost complete and we expect to mobilise funds for its construction, which is scheduled to begin next year,” said Mr Kiilu. The 400 KV line is expected to be completed by 2015 and is projected to cost about $800 million.
The third is the Kenya-Uganda line, which runs from Lessos in Kenya to Tororo in Uganda. Under the EAPP plan, the 132KV line constructed in 1955, will be upgraded to a 220KV double circuit line, to increase its supply and efficiency. Construction of the transmission line is planned to commence next year and will be funded by the African Development Bank at a cost of approximately $60 million.
Others are the 220KV transmission line between Uganda and Rwanda and the 220KV transmission line between Rwanda and Burundi.
Dr Sezibera argues that if a framework for pooling energy resources were to be developed, partner states and their power utilities would be able to pool resources for large projects that offer competitive advantages and economies of scale, regardless of where they are located.
To push the initiative, the EAC secretariat has developed a Regional Investment Code for the sector, under the proposed Integrated Energy Markets Development Programme, to help develop the necessary legal and regulatory framework.
The EAC secretary-general adds that partner states are also keen to negotiate suitable tariffs with independent power producers to ensure electricity remains affordable and does not adversely affect the competitiveness of East African products.
“Balancing these interests inevitably takes time, leading to slippages in the implementation programmes of the power master plan,” he adds.
Electricity must reach 20 million more households in the wider East African region by 2015 in order to meet national electrification targets. If economies grow robustly and trade expands, the World Bank estimates that the EAPP/Nile Basin will require 23,000MW of new capacity to light up these new households. In addition, more than 1,000MW of existing capacity must be refurbished.
These are formidable goals, considering that on average, regional investment in the power sector is far below this level, and power suppliers in the region are severely plagued by inefficiencies. In Tanzania, for example, national supplier Tanesco’s revenue barely covers operational costs, so capital expenses must be subsidised by the public sector or donor financing. The company reports transmission and distribution losses of 26 per cent compared with a global best practice standard of 10 per cent. As a result, it captures only up to 64 per cent of potential revenue.
The country plans to increase grid connections to 29 per cent of the population (63 per cent urban and 2 per cent rural) by 2015. To achieve this, the power sector needs to install 2,046MW of new generation capacity and 266MW in interconnectors to keep pace with demand.
Tanzania currently devotes $1.2 billion annually to meet its infrastructure needs, $358 million of which goes towards power. AICD forecasts that the country will have to step up its power spending to $910 million annually between 2010 and 2015 to achieve its goals, of which $631 million would go towards capital expenditure, and $280 million towards operation and maintenance.
The situation is similar in Kenya. Kenya Power reports transmission and distribution losses of 18 per cent, almost double the best-practice benchmark of 10 per cent. As a result, Kenya Power’s operational inefficiencies make the country lose a staggering 0.3 per cent of GDP. AICD projects that the country needs to spend $1 billion annually to keep up with demand and achieve national electrification targets, but at present only $471 million a year goes to the power sector. Even if inefficiencies were to be reduced by $100 million, the funding gap is still more than $429 million.
The World Bank estimates that a staggering 93 per cent of Africa’s economically viable hydropower potential, which makes up a tenth of the world’s total, remains unexploited. Electric power represents 40-80 per cent of the continent’s infrastructure deficiencies. It is an almost-worn out narrative: Unreliable power is ubiquitous in Africa, hurting manufacturing, slowing down economic progress, and compromising social life, particularly in the urban areas.
It is estimated that the combined power generation capacity of all of sub-Saharan Africa is 68 Gigawatts (GW) — no more than that of Spain, with South Africa alone accounting for 40GW of this figure. Moreover, nearly a quarter of the installed capacity is not operational for various reasons, including ageing plants and lack of maintenance.
Additional reporting by Jeff Otieno, Michael Wakabi, Mike Mande and Berna Namata