Faridah N Kulumba
Africa-Press – Uganda. Authorities in Kenya have started discussions with the government of Uganda to stop the electricity exchange agreement and replace it with an outright purchase from the neighbouring country that continues to produce excess power. Recently Kenya approached Uganda to turn the deal into a Power Purchase Agreement (PPA) in what will mirror an arrangement with Ethiopia. The two East African countries Kenya and Uganda, through their state-owned electricity distribution companies, have a power exchange deal where the country that imports more from the other pays at the end of a given period.
Previous agreement
In 2019, Kenya and Uganda h signed a new power purchase agreement (PPA) that was meant to facilitate bilateral power trade and take into account new dynamics in the energy sector, including increased generation capacity. The signed agreement was designed to facilitate two-way electricity imports and exports between the two countries, marking the end of the previous pact that only focused on Kenya’s imports from Uganda, and limited supply to emergency situations.
The aim of the deal
The two neighbours Uganda and Kenya are aiming at increasing the supply of hydropower, which is the cheapest of all sources in the national grid, is key to the country’s efforts of lowering electricity bills besides cutting reliance on dirty thermal plants. After signing the 2019 PPA deal authorities from both parties said that it was necessitated by investments by both countries in electricity generation facilities resulting in excess capacity, a development that has prompted a downward revision of tariffs. Kenya said that the new PPA that was negotiated with Uganda was good for the country because the tariff came down drastically. Kenya intended to import a maximum of 50MW from Uganda annually.
Why import with Uganda
According to Daniel Kiptoo, the Director-General of the Energy and Petroleum Regulatory Authority, Uganda recently completed two big hydropower plants and now has excess power. There are discussions between Kenya Power and its Ugandan counterpart to lock this excess power through a PPA. Generation deficits have made Kenya to be a net importer in the exchange agreement with Uganda, prompting the latest push to convert the deal into a PPA. Generation deficits have made Kenya to be a net importer in the exchange agreement with Uganda, prompting the latest push to convert the deal into a PPA.Kenya’s electricity imports from Uganda increased 18.4 percent in January, fuelled by a bigger demand. Data from the Energy and Petroleum Regulatory Authority (Epra) showed that Kenya imported 20.29 million units of power from the Uganda Electricity Transmission Company Limited. Kenya imported 55.85 million units of power from Uganda between January and March this year and exported a paltry 10.65 million units in the same period. Uganda generates 1,254MW, of which 1,004.3MW is from hydro dams. The average demand peaks at 800MW. Kenya, Tanzania, South Sudan, and the Democratic Republic of Congo (DRC) are the top markets for Uganda’s surplus electricity.
Kenya-Ethiopia power imports
Between January and March this year, Kenyan electricity imports increased to 408.78 Gigawatt-hours (GWh), but most of this power is from Ethiopia. The recent PPA negotiations Uganda between Uganda and Kenya come at a time when Kenya has ramped up imports from Ethiopia to boost increased generation from the country’s dams and geothermal sources, helping lower bills on consumers. Locally generated hydropower is the cheapest in the national grid, with a unit retailing at USD 0.029 (Ksh3.83), followed by a unit of geothermal power at 0.078 (Ksh10.28) while a unit of imported hydroelectricity was at Ksh10.69 as of February this year. Kenya currently has a 25-year PPA with Ethiopia with the power priced at USD 0.065 (Sh8.6) per kilowatt. Kenya will however be allowed to renegotiate the tariff from 2027 at the earliest in line with the agreement. However, the tariff that Kenya Power is targeting in the proposed PPA with the Uganda Electricity Distribution Company Limited (UEDCL) and the validity period remains undisclosed.
Kenya and Uganda’s current relations
The relationship between Uganda and Kenya is moving smoothly currently. This followed the President of the Republic of Uganda Gen, Yoweri Kaguta Museveni traveling to Kenya on the 16th of this month for a state visit at the invitation of Kenyan President William Ruto. The two neighbouring countries have been having a cold trade in the past few years, which resulted in Kenya banning some of Uganda’s imports. However, during the recent meeting that took place in Nairobi Ugandan President Museveni and his Kenyan counterpart Ruto, the two heads of state, signed several Memorandum of Understanding (MoU), including the tripartite agreement on the importation and transit of petroleum products through the two countries. The meeting between the two leaders aimed at strengthening the longstanding bilateral relations between the two neighbouring countries and exploring new avenues for collaboration and mutual benefits.
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