Stampede to invest in infrastructure in East Africa
|Menengai Geothermal Station, Kenya|
However, Kenya boasted of a 23 infrastructure projects including energy which are worth less than a billion dollars. Ethiopia and Kenya lead in the number of projects under construction. According to the business consultancy Firm, Delloite, in 2017 the two commanded 43 projects with, Kenya leading with 23 projects and Ethiopia with 20 projects.
However, Ethiopia led in terms of the dollar value of the projects. This is not surprising for Ethiopia is investing heavily in Railways and Hydro dam projects that are naturally expensive and take longer to complete. Her total investment in mega projects stands at $9.6 billion, compared to Kenya’s $4.5 billion.
Among Ethiopia’s megaprojects are the US$4.8 billion GERD, the Grand Ethiopian Renaissance Dam. This is the largest project in Africa that will produce 6GW of electricity. There is also Koysha hydro dam worth $2.8 billion under construction and two Railway projects worth $2.9 billion
Kenya’s projects are smaller, cheaper and quicker to complete. Her High-value projects are already complete and operational. For instance, the Lake Turkana Wind Power project which featured in the 2017 report is now complete and operational while the Nairobi–Naivasha section of the SGR line will be completed by June this year. The Mombasa Nairobi Section of the SGR also operational.
Tanzania will increase its project numbers with the signing of the contract to construct the US$3.5 billion Rufiji Hydro dam.
Investments in Electricity generation in East Africa have declined from 37 in 2013 to 23 in 2017 suggesting a completion rate of 35 percent. However, as old projects are completed, new ones are launched. Even then, the stampede in investing in power projects is slowing down. Its place is being taken by projects in the transport sector which have risen from 42 in 2013 to 52 in 2017. In between there were rises and falls, suggesting a high completion rate.
|Karuma Hydro Dam:|
Uganda's largest Hydro dam
The growth in energy generation coupled with investment in transport infrastructure brings the dream of industrializing the region close to reality.
Demand for electricity in the region grows at between 8 percent in Kenya to 35 percent in Ethiopia, meaning that the current self-sufficiency is short-term. This means that there is a need for more investment in power generating capacity, thus the stampede.
This is not surprising. The region is the fastest growing in Africa, posting annual GDP growth rates of between 5 and 8 percent. It has in the past suffered crippling power shortages thus stifling economic growth and poverty alleviation. But the recent robust economic growth has spurred more investment into the power sector to avoid future shortages.
Ethiopia is the largest economy in the region having displaced Kenya from the top perch.
Kenya, the second largest economy has already hit the 2.7GW level with a peak demand estimated at 1.9GW. That is why it is now working to connect the Northern Corridor Standard Gauge Railway to electricity. Experts say that the line will require 1000MW to run the trains.
While Ethiopia is the runaway leader in Hydro sources, with a potential of 45GW, Kenya is the leader in Africa on geothermal power. Already geothermal power has displaced Hydro as the base power. Kenya’s potential is estimated at 10GW of geothermal power energy. She so far is just scratching the surface, generating 700MW from geothermal sources with another 600MW slated for the national grid over the next two years.
Kenya has already leap-frogged Ethiopia in wind power generation with the entry of 310MW Lake Turkana Wind Power into the national grid. Ethiopia capacity stands at 176 MW while Kenya is 336 MW with two more projects with a capacity of 100MW, each expected on stream two years down the road.
Uganda is a fast-rising star targeting a capacity of 3.5 GW by 2020. Her main source of power generation is hydro which generates the bulk of her 852 MW capacity. The major producers are Nalubale (180MW); Bujagali (250 MW) and Kiira (200MW).
Two more projects are slated for completion this year. These are Karuma Hydro Project (600MW) and Isimba (183MW). The two projects with a total output of 800MW, are nearing completion. In addition to the large projects, Uganda also develops small producers, some with a capacity as low as 10MW making it an attractive proposition for private sector investors.
|GERD, Ethiopia, Africa's largest Hydro project|
In addition, the country has just inked a contract for the construction of a 2.1GW hydro dam on River Rufiji. The controversial dam will be built at Stieglers Gorge within the world famous Selous game reserve. The project is expected to double Tanzania’s power generating capacity and eliminate the chronic power shortages in East Africa’s third-largest economy.
Only Kenya has liberalized power generation. Investors sign 25 year Power Purchase Agreements with national power distributor, KPLC. This has seen a spurt in power generation in Wind and geothermal by the private sector. Among these, the leader is Lake Turkana wind Power and Orr power in geothermal power generation.
The US$700 million Lake Turkana is the largest private sector investment in Kenya’s history. While Orr Power generates more than 100MW from geothermal, other players are joining in.