Four tea factories in Nyeri are set to benefit from a multi-million dollar small- hydro power project that will see them diversify their revenue sources.
Set to be commissioned in 2014, the Gura Small Hydro Power Project is expected to cost Ksh 1.3 billion and will generate 5 Mega Watts of electricity. The revenue generated will be shared between Gathuthi, Gitugi, Iriaini, Chinga tea factories in Nyeri, and the KTDA Power Company Ltd who are the shareholders.
Construction work, to be undertaken by official contractors VS Holdings of Sri Lanka is set to begin immediately following the official ground breaking ceremony for the project in December 2012.
Nine other Small Hydro Power Projects countrywide are also in the pipeline as KTDA Power Company moves to mobilize resources to enable all the 65 KTDA managed factories diversify their business and generate additional revenue,” said Mr Lerionka Tiampati, KTDA Holdings Chief Executive Officer.
He added “Hydro power development is a renewable energy (green energy) thus the projects will have a potential to benefit from Carbon Credit Revenue”
Mr Tiampati said each of the KTDA factories spends between Ksh 35 and 40 million shillings annually on power costs, adding that energy (electrical and thermal) accounted for about 30 per cent of the operational costs of the tea factories, with electricity alone accounting for 17 per cent.
The cost of putting up a small hydro is high and factory companies have to resort to loans to raise the necessary capital in addition to equity contribution. Shareholders (farmers) of respective KTDA-managed Tea Factories farmers have shown their commitment to the projects by raising substantial amounts in equity, while KTDA Holdings has guaranteed loans to construct the power stations.
KTDA Holdings has guaranteed loans to the tune of 8.5 M USD to construct the Gura Small Hydro Power Station
The excess power generated from the Gura project would be sold to the national grid and the benefits would then be passed over to the small scale tea farmers through their factory companies.
Speaking during the ground breaking ceremony at Gura, Mr Tiampati said that KTDA was also exploring other sources of renewable energy like wind and Solar power to supplement and augment its energy needs. To this extent, the company had identified the Michimikuru Wind Project which had the potential to produce 24 megawatts of power.
KTDA Board Chairman Peter Kanyago said KTDA’s investment in the small hydro power plants was a strategy meant to mitigate the rising costs of production particularly in labor and electricity as the per-kilo cost of made tea keeps rising over the years.
He also thanked the Ministry of Energy for undertaking the initial feasibility studies for some of the sites where KTDA planned to build the hydro stations.
KTDA’s first small hydro pilot project was at Imenti Tea Factory in Meru County, with its 1Mega Watt small hydro plant that was commissioned in 2009. The power project has been able to reduce the factories electricity bill by almost 60%. The factory consumes about half of the electricity generated (0.4 MW to 0.5 MW) and sells the surplus to the national grid through a power purchase agreement (PPA) with Kenya Power.
Apart from Imenti Power Plant that was successfully commissioned in 2009, other Small Hydro sites are being developed under Phase 1 of the SHP project. The 10 sites will have a total combined installed capacity of almost 24 MW. KTDA Power Company expects to sign a power wheeling agreement with Kenya Power once the regulator approves, which will facilitate transmission of power to factories that are not within close proximity to the hydro sites.
For more information, please contact:
KTDA Corporate Affairs Department
Tel 020-3227000, 3227915
Corporate Affairs Manager
Group Head of Corporate Affairs