NAIROBI (Reuters) - Kenya’s main electricity producer, KenGen, is seeking a partner to produce nuclear power by 2022 to help meet rising demand and diversify from hydropower, its managing director said on Friday.
Kenya relies on hydropower to generate a lion’s share of its electricity but has started investing in geothermal plants and wind farms to diversify and increase its energy sources and be less reliant on rainfall to fill its dams.
“The nuclear space is new and as the biggest power producer (in Kenya) we are considering getting in on the act once the laws and other modalities are in place,” KenGen’s Managing Director Eddy Njoroge told Reuters on the sidelines of an energy conference.
“It’s a space we would want to be in, we are looking for partners, and hopefully by 2022 we could be producing,” he said.
Njoroge said Kenya as a whole expected to produce some 4,200 megawatts (MW) using nuclear by 2022, and KenGen aimed to produce some undisclosed part of that electricity on a continent where South Africa is the only country producing nuclear power.
Kenya sees nuclear power both as a long-term solution to high fuel costs -- incurred during times of drought when diesel generators are used -- and an effective way to cut carbon emissions from the power generating sector.
Kenya has forecast a drought in the latter part of the year and early next year, but Njoroge said he did not expect KenGen’s power output to suffer.
“Our dams are full and unless the long rains due next April are affected, power supply will remain steady,” he said.
KenGen’s profits were battered by poor rain, sending its shares falling.
Without giving specific details, Njoroge forecast a recovery in the current financial year, saying the company was unlikely to face the severe drought that affected its margins.
Njoroge also said KenGen was likely to find a strategic investor and the possible sale would bring in funds to be invested in energy-generation projects.
He said a consortium of consultants led by PriceWaterhouseCoopers was advising the company on whether to take on a strategic partner, which would buy some shares currently held by the government.
KenGen is 70 percent owned by the government while the remaining stake is held by the public through the Nairobi bourse and it is on a list of a host of enterprises that the government wants to privatise further.
“It may not be prudent to go for a second IPO (Initial Public Offer) -- as this could depress the share price and we are unlikely to get good value,” Njoroge said.
The company -- which has two bonds in the market - is keen to raise further funds for new power projects, and is looking to tap capital markets and banks.
Njoroge said KenGen needs to invest $600 million in power generation every year to add 140 MW to keep up with demand.
“We are always considering ways to raise capital, but for now we have no concrete plans yet,” he said.
KenGen generates about 1,000 MW of electricity - 80 percent of Kenyan supply, with 700 MW of that coming from dams. The company aims to produce 1,500 MW by 2012, 3,000 MW by 2018 and then triple this amount by 2030.
Njoroge said together with Independent Power Producers and other players, the country would have about 17,764 MW by 2030.