Kenya Power spent Sh6.2 billion in purchase of locally manufactured goods in the first quarter of 2016/17 in line with the Buy Kenyan Build Kenya Initiative meant to promote the manufacturing sector.
The Company purchased pre-paid meters worth Sh4.7 billion in the year to June 30 from the local market.
For the first time, Kenya Power has also budgeted to spend Sh424 million on locally assembled transformers during the current financial year.
Out of Kenya Power’s capital expenditure budget of Sh184 billion for the last four years, the Company spent Sh120 billion in purchase of locally manufactured electricity distribution equipment.
In July, Kenya Power published new procurement guidelines which stated that 80 per cent of all electricity distribution equipment will be sourced from the country, giving preference to local investors.
Industries account for more than 60 per cent of Kenya Power’s electricity sales revenue. Supporting the manufacturing sector will in turn boost the Company’s core business.
The new procurement guidelines have already attracted three international companies; Pan African Transformers, Yocean Group Limited and Continental Transformers, involved in manufacturing transformers to set up plants in the country, creating jobs for Kenyan citizens.
“Kenya Power has taken a deliberate step to prioritise purchase of equipment and materials from the local market to encourage manufacturers to set up plants in Kenya. The aim is to retain at least 80 per cent of the Company’s annual procurement budget, which stands at Sh54 billion, in the country,” said Kenya Power’s Managing Director and CEO Ben Chumo.
Speaking at the Manufacturers Expo 2016 held at the KICC today, Dr Chumo also disclosed that Kenya Power is no longer importing wooden poles from international markets such as Chile and Brazil as was the case in the past.
“We have 54 Kenyan companies currently supplying us with both concrete and wooden poles, eliminating the need to import these materials. This has created about 540 direct jobs for Kenyans and several other indirect employment opportunities,” he said.
The electricity sector has grown tremendously in the period between 2013 and 2016, from an installed capacity of about 1,700 MW to the current 2,341MW.
The peak demand stands at 1,620 MW with a reserve margin of 33 per cent, above the international standard which is 30 per cent.
As such, there are deliberate efforts to create demand for the additional generation capacity, which calls for investment in the manufacturing sector.
Demand for locally manufactured electrical equipment is set to rise with the implementation of various projects by the government that are meant to increase the country’s access to electricity.
The Last Mile Connectivity Project (LMCP) is one of such undertakings that targets to achieve massive power connections to households at a subsidized rate of Sh15,000.
The first phase of the LMCP is under implementation, funded by the Government of Kenya and the African Development Bank (AfDB). It targets to connect 314,000 households.
Under the second phase of the LMCP that is funded by the World Bank to a tune of Sh15 billion, the main undertaking will be to increase the number of transformers by 1,000.
The LMCP will open doors to manufacturers to supply poles, cables, meters and other assorted equipment.