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The East African : Sep 26th 2015
36 The EastAfrican BUSINESS SEPTEMBER 26 - OCTOBER 2, 2015 MININ G AN D E N E RGY Region now ta≥gets 3-month oil ≥ese≥ves BY ALEX NGARAMBE Special Correspondent EAST AFRICAN Community member states are mooting plans to raise their petroleum reserves to at least three months to stem the increasing energy insecurity in the region. EAC senior energy officer Peter Kinuthia said this initiative is related to others such as the EAC Electricity Regional Master Plan and the EAC Refinery Development Strategy. In the electricity sector, A new regional power market linking EAPP and Southern Africa Power Pool is envisaged. Picture: File EAC states pulls out of regional power pool for new, larger EAPP EACPP would be app≥oaching the same development pa≥tne≥s cu≥≥ently suppo≥ting EAPP By CHRISTABEL LIGAMI Special Correspondent of a proposed regional power sharing pool to avoid duplicating the intentions of a bigger initiative. The five EAC countries E have since 2003 been interconnecting their power lines to improve supply, stabilise access and foster trading in electricity across national borders. The EAC’s senior energy officer Peter Kinuthia said the EAC member states also belonged to the wider Eastern Africa Power Pool (EAPP) under which the EAC Power Pool falls. EAPP is meant to link up nine countries by 2018. The overlap would not make investment sense as member states are required to contribute to each initiative. This means that the five countries will have their power lines connected to the larger power pool, whose headquarters will be in Addis Ababa. Four other countries —Egypt, Ethiopia, Democratic Republic of Congo and Sudan — are members of the wider pool. “Linking up national grids means one state can tap idle supplies in another.” Peter Kinuthia EAC senior energy officer ast African Community members have pulled out Mr Kinuthia said the ex- perience of EAPP has shown that contributions from member states and member utilities are not sufficient to cover the recurrent and development budget. As a result, resources have to be mobilised from development partners. EACPP would face a similar scenario; besides, it would be approaching the same development partners currently supporting EAPP. Under the Tripartite Free Trade arrangement, a regional power market linking EAPP and the Southern Africa Power Pool (SAPP) is envisaged. It is estimated that about a quarter of electricity generated in EAPP countries comes from hydropower with future investments creating a greater dependence on the resource. “Linking up national grids would provide a bigger pool of resources and mean one state can tap idle supplies in another,” said Mr Kinuthia. The power interconnec- tions between Ethiopia, Kenya, Uganda, Rwanda and Tanzania are expected to be complete in three years. Under the EAPP, a high- voltage line between Ethiopia and Kenya will be ready in 2017, a Kenya-Uganda link will be complete by the end of 2016, and a Kenya-Tanzania connection will be working in 2018. The Kenya-Ethiopia link will be a 500 kilovolt (kV) line, while the lines to Uganda and Tanzania will be 400kV. The line to Uganda would then connect to Rwanda and Burundi. Kenya, which relies heavily on hydropower, geothermal and other renewables, aims to expand installed capacity to 6,700MW by 2017, from about 2,500MW currently. Tanzania aims to double generation to 3,000MW by 2016. Ethiopia aims to become a major power exporter through large new dams and other renewable energy projects. By 2020, it aims to add 12,000MW to its grid. The EAPP is being support- ed by the US government, the World Bank, African Develop- EAPP The Eastern Africa Power Pool will have its headquarters in Addis Ababa, Ethiopia Its members are host Ethiopia, Kenya, Uganda, Tanzania, Rwanda, Burundi, Egypt, the Democratic Republic of Congo and Sudan. Ethiopia aims to add 12,000MW to its grid by 2020 while Kenya, with an installed capacity of 2,500MW targets 6,700 by 6,700. Tanzania’s aims to hit 3,000MW by 2016. EAPP is being supported by the US, the World Bank, African Development Bank, and the region’s governments. ment Bank, and the region’s governments. Power shortages are com- mon across East Africa and businesses often complain that poor or erratic supplies deter investors and push up prices of local products, as many firms rely on costly generators. Other African regions like West Africa have already connected up their grids. Southern Africa has a series of links between South Africa, Zambia, Zimbabwe and Mozambique, allowing the countries to trade power. imbalance between demand and supply has led to quick fixes, that are costing countries from 0.96- 3.2 per cent of their gross domestic product. The combined energy generation capacity of the five EAC countries stands at 5,000MW, which experts say is not enough to meet the demand of increasing economic growth and pursuit of industrialisation. Although countries in the region have since 2000 increased their electricity generation capacities — Kenya, Rwanda, Tanzania and Uganda, for example, have added 51 per cent, 45 per cent, 68 per cent and 52 per cent respectively — the deficit is still large and more investment is needed in the sector. At a regional meeting in Kigali, experts argued for the strengthening of regional energy trade and addressing infrastructure bottlenecks. “There are countries in the region that can generate and sell power at $0.06 cents/kWh. Addressing infrastructure can help tap into cheaper power from the region,” said Yohannes Hailu of the UN Economic Commission for Africa, subregional office for Eastern Africa. EAC countries, he added, could maximise the benefits of falling global oil prices through stocking strategic reserves purchased at favourable prices, if they had sufficient infrastructure. “Before implementing all these ideas, the region needs guidelines on how to do it; these can be formulated in a combined policy framework,” said Nathan Gashaijja, director general of East African Affairs at Rwanda’s Ministry of East African Community. The inititative comes at a time that EAC states are grappling with high energy costs. “The aim should be in- creasing availability of reliable energy at increasingly stable or lower cost in or- der to support robust industrialisation,” said Mr Hailu. However, at the national level, there is a need to conduct an energy resources and power output potential assessment and prioritise investment in the energy sector to increase energy supply. In the case of Rwanda, methane gas and peat should have top priority; in the absence of robust private sector investment, Rwanda can consider mobilising public resources to invest in these energy sources. “In the case of countries like Kenya, they have just got positive feedback from the International Atomic Energy Agency to proceed with plans to develop peaceful nuclear energy. Therefore, unconventional power generation options and preparation for them need to be considered, along with building institutional and human capacity,” said Mr Hailu. To increase petroleum re- serves, Rwanda is expanding its national strategic reserves from 30 million litres currently to 150 million litres by 2017. Uganda, Kenya and Tanzania are also working to expand their reserves. EAC countries could benefit from falling global oil prices by stocking of strategic reserves purchased at favourable prices.
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