1. Posted on Sunday 1 November 2009 - 11:16

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   foluoch

   

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   By FRED OLUOCH
   Even though power rationing in Kenya has come to an end, there are still concern that
   the country's continued dependency on hydropower generation could affect its competitiveness as a leading investment destination in the region.
   
   The business community is worried that power shortages will still recur unless the government invests in alternative sources of energy. But of great concern to the manufacturing sector is the high power tariffs that has made production cost in Kenya is one of the highest globally.
   
   According to the managing director of the Kenya Association of Manufacturers (KAM), Betty Maina, Kenya's products are increasingly finding it difficult to compete with those from other countries especially Asia because of the variations in the costs of doing business.
   
   Research by KAM reveals that Kenyan manufacturers for instance, are paying between Sh10 and Sh15 per kilowatt of electricity, their competitors in China and India pay the equivalent of between Sh2.50 and Sh3.80 per kilowatt of electricity. Therefore, this makes their products much cheaper than Kenya's.
   
   In Africa, the cost of electricity in Egypt and South Africa is quite minimal. For example, electricity in Kenya is four times costlier than it is in Egypt which is a major trading partner within the Comesa bloc. This is a major set back for Kenyan manufacturers whose commodities will not be able to compete with those from other countries where the cost of doing business is still low," she said.
   
   But what does the scenario portend for Kenya's competitiveness within the five member countries of East African Community (EAC)? There have been reports that most of the investors that shift base from Kenya to Tanzania, are citing high cost of doing business.
   
   Yet Kenya is not alone given that Uganda and Tanzania are also experiencing power woes of their own. The major problem area for the three countries is that three governments over the years, have had low public investment over the years in generation capacity, transmission and distribution.
   
   The region already has some of the highest power tariffs and any further tariff increments will simply increase the cost of doing business. Experts argue that power tariffs in East Africa are five to 10 times higher than in Egypt or South Africa.
   
   Recently, Ugandan president Yoweri Museveni, conceded at the EAC conference on peace and security that electricity has been a major hindrance to his country's economic takeoff , but that the government has learnt its lessons.
   
   "In the past, we used to rely on outsiders to build the dams for us. Now, we are using our own money to build the dams. I do not share the pessimism that we cannot take off. Uganda is expected a 7 percent economic growth this year despite the global economic crisis," he said at the EAC meeting on peace and security in Kampala.
   
   Still, while President Museveni is bullish that Uganda will soon overcome its electricity problems, Kenya's continued reliance on hydroelectric power that depends on rainfall, is costing the country dearly in terms production time and loss of investment foreign potential.
   
   The recent energy crisis was caused by the persistent drought in the country that resulted in the closure of Masinga Dam in July, the country's main water reservoir. The country relies on hydroelectric plants for 90% of its power generation has continued to record low rainfall, but the government has been faulted for poor planning and bureaucracy that have kept away investments in the power sector.
   
   Kenya Power and Lighting Company (KPLC) argues that the rise in the tariffs is as a result of actual rise in the cost of electricity of about 25 per cent, as well as levies for generator fuel, the rural electrification programme, the Energy Regulatory Commission, forex adjustments and VAT..
   
   The recent drought drastically reduced the country's capacity to generate hydroelectric power, causing a supplier gap of 146 megawatts that the KPLC managed by rationing power and harnessing thermal energy
   
   Every time Kenya suffers power shortages just like in 1999, the government resorts to installing emergency thermoelectric plants, which costs more due to the high cost of fuel required to run them.
   
   Now, the Kenya government is hopeful that electricity supply to become more stable once more players step in to take advantage of the current incentives being offered to the private sector to invest in energy generation projects.
   
   The government track Kenya needs to speed up the generation and use of clean and renewable sources of energy such as wind, solar, biomass and biogas. Despite importing expensive fossil fuels, Kenya has geothermal potential capable of generating about 2000 megawatts.
   
   
   According to government plans, more than 2,000MW will be added to the national grid with the use of green energy. This is in line with the UN's green energy projects and recommendations that countries in Africa focus on generating power from wind and solar power.
   
   Mid this year, the Africa Development Bank (ADB) injected Sh32 billion into a private consortium to develop an initial 300MW from wind energy in Turkana District, which in the long run is expected to boost the national grid.
   According to Ms Maina, the recent increase in electricity tariffs are too high for the industry to absorb and it must be reduced as soon as possible before it causes further damage to the industry.
   
   With the proposed increase by KenGen, the overall effective cost per unit will rise from Ksh. 8 to Ksh. 15per unit for the industrial sector. She argued that the industry cannot risk passing on this cost to consumers because it will reduce their purchasing power resulting in reduced sales. Equally, manufacturers are unable to plan for the future because the effect of fuel cost adjustment has made the cost of production unpredictable as the fuel cost keeps varying every month.
   
   As a result, Kenya';s products have become very uncompetitive, a fact that has adversely affected the export market, with KAM members worried that the high cost of electricity is bound to forestall efforts to industrialise.
   
   "As industries find it unsustainable to operate in the country, they will either shift to friendlier countries or shift into trading, transforming the country into a net importer of consumer goods,"she said.

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1. Posted on Sunday 01 November 2009 11:19

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   foluoch

   

   
   10 berichten
   Lid sinds July 2007

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   By FRED OLUOCH
   
   As the political class in the East African region grapples with how to go about creating regional uniform standards of good governance, the question is whether the civil society in the region has the capacity to keep the member states in check.
   
   Despite the fact that Section 127 of the East African Treaty compels member states to involved civil society organizations in the development agenda of the regional trade block, a conference held in Burundi recently proved that members of the civil society are still not sure whether they will be allowed to play their role of keeping the political class in check.
   
   Given that the civil society forum was convened by the East African Community (EAC) secretariat in anticipation of the completion of negotiation on the common market protocol to be signed on November 20 by the five EAC member states, there was still doubt among the civil society organizations from the region whether the EAC secretariat should take the lead in creating a civil society forum that will keep it in check. This was proof enough that the hangover that the regional block is still driven by individual leaders is still yet to go away.
   
   This is despite the usually propagated line that unlike the initial EAC— that was dependent mainly of the good will of the three presidents of Tanzania, Kenya and Uganda— the revamped regional block is operating on the basis of a people-centered and business-driven integration. Secondly, Burundi and Rwanda has joined the club and the scope of decision-making has been significantly widened the level of consultations and it is no longer a talking of the three founder members.
   
   Article 127 requires the partner states to promote continuous dialogue with the private sector and civil society at the national level and at that of the community to help create an improved business environment. In part 3 and 4 of the same article, the partner states agree to promote enabling environment for the participation of the civil society in the development activities within the community
   
   As a result, the EAC secretariat has been conducting national sensitization and awareness creation workshops for civil society organizations in all partner states beginning 2009, which culminated into the Bujumbura forum. The meeting was meant to establish networks for that will ensure continuous engagement with the civil society within the institutional framework of EAC.
   
   But even through the civil society, by nature, is supposed to generate policy options for governments, play a watchdog position, and act as a bridge between communities and state institutions, this role has never been fully exploited at the regional level.
   
   The rule says that for any non-governmental organisation to gain permanent observer status at the EAC, it must be registered in all the five partner states. This gives broader outlook and avoids attracting briefcases NGOs.
   
   Still, very few NGOs at the moment have the capacity to maintain significant presence in all the five member states. The advise from the EA secretariat was that the civil society sector should rethink their relations with regional bodies, redefine their strategies and see how they can seize every opportunity to become part and parcel of the integration process.

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