Companies
Two firms eye Sh187bn power-line deals
Friday December 22 2023
The National Treasury building in Nairobi in this picture taken on March 15, 2023. PHOTO | DENNIS ONSONGO | NMG
Two private firms have lined up power transmission line and substation projects worth Sh187.1 billion under Public Private Partnership (PPP) agreements with the government, raising hopes of improving the country’s shaky grid that has been blamed for frequent outages.
National Treasury disclosure shows that Africa 50 and Adani Energy Solutions Ltd are proposing to put up 237 kilometres and 388 kilometres of high-voltage power lines, respectively.
Read: Use private investors to power frontier counties
Adani is also lining up three substations at Thurdibuoro in Kisumu County, Lessos (Nandi) and Rongai (Kajiado). The projects have been presented by the two companies as Privately-Initiated Proposals (PIPs)—an arrangement provided for under the PPP Act which allows the government to benefit from the knowledge and innovative ideas of the private sector.
Energy Cabinet Secretary Davis Chirchir recently said that the government would be leaning on the private sector to put up power transmission lines on a PPP model to help the government bridge an investment lag in the critical infrastructure.
“There are two projects under PIPs to support electricity transmission lines currently under project development phase – Africa 50 covering 165km-400 Kilovolts (KV) along Losuk – Lessos; Kisumu – Musaga 72 KM -220KV. The Project is estimated to cost $313.25 million,” said the Treasury in its Draft 2024 Budget Policy Statement.
“Adani Energy Solutions Ltd plans to do 197km – 400KV along Gilgil – Thika – Mala – Konza; 101km-220KV along Rongai – Keringut Chemosit; 90km – 132KV along Menengai – Olkalau – Rumuruti; 400/220KV sub stations at Lessos and Rongai; and 132/33KV Thurdibuoro substation. Estimated cost $907 million.”
Adani Energy Solutions is India’s largest private transmission firm and is part of the Adani Group- owned by the country’s second wealthiest person Gautam Adani.
Africa 50 on its part was established by the African Development Bank (AfDB) to facilitate development and financing of medium- to large-scale projects on the continent. Its investor base is currently composed of the AfDB, two central banks, and 31 African countries, including Kenya.
Under the PPP law, evaluations after the project development phase can either result in a project being set aside, awarded to the proposer or being subjected to open tender.
Earlier this year, MPs called on the government to use the PPP model to construct high-voltage power lines to ease pressure on the Exchequer, which has faced limited debt headroom to fund such capital-intensive projects.
Read: Attorney General faults KPLC power purchase deals
The MPs identified the Loyangalani-Marsabit, Marsabit-Isiolo and Gilgil-Thika-Konza lines, each with a capacity of 400 KV, as being ripe for private sector participation.
