Despite a succession of power crises caused by low rainfall and an over reliance on hydroelectric power production, a new period of dam construction is likely in East Africa. Kenya, Tanzania and Uganda all rely heavily on hydro schemes but regional integration is likely to encourage construction of further dam projects as well as thermal plants, as investors take advantage of an increasingly integrated market in electricity. Where will the new dams be sited and how will the regional generation mix change?
Power sector integration is likely to have the most impact on the three founding countries of the East African Community (EAC). An interconnector already enables Uganda to export electricity to Kenya but a new transmission line is currently under development between the northern Tanzanian town of Arusha and the Kenya capital Nairobi, thereby enabling much greater trade in electricity between the three countries. However, Rwanda and Burundi, which joined the EAC last year, also hope to connect their power grids to the rest of the EAC in the near future. The EAC member states are aiming for full economic integration within the next decade and the creation of a regional power grid is seen as one of the best ways of achieving this.
Transmission integration is also viewed as the best long term solution to the periodic power rationing that continues to undermine attempts to encourage greater industrial and manufacturing activity in East Africa. Droughts have become increasingly common, with severe cuts in hydroelectric production during 1997-98, 1999 and 2005-06. Most recently, in 2006, falling water levels forced most Tanzanian hydro schemes to cut production by about half. At the same time, consistently low water levels on Lake Victoria reduced the generating capacity of the Uganda Electricity Generation Company by 40%.
The Kenyan government is being forced to seek long term power import agreements from outside the EAC while it waits for new capacity to come on stream within the region. South Africa was expected to be the preferred option once the Arusha-Nairobi interconnector was completed, effectively making Kenya part of the Southern African Power Pool (SAPP). However, South African power utility Eskom is facing its own power supply problems and is now a very unlikely source of supply.
In August, Kenya’s new prime minister Raila Odinga suggested that imports were now most likely to come from Ethiopia, where the Tekeze, Gilgel Gibe II and Beles dam projects will jointly provide 1155MW of new generating capacity. However a new transmission link would be required to transport Ethiopian electricity to the main centres of Kenyan demand. Electricity consumption in the country has increased by about 8% a year over the past five years and KenGen is only just able to satisfy demand at present when hydro schemes are fully operational, so additional capacity is required as soon as possible.
As Table 1 demonstrates, the heart of the Kenyan hydro sector is the Seven Forks Cascade, which lies on the River Tana, about 150-200km from Nairobi, where the Masinga, Kamburu, Gitaru, Kindaruma and Kiambere schemes were developed between 1968 and 1988. However, the Karura, Mutonga, Low Grand Falls, Usheni, Adamsons Falls and Kora sites at the Cascade remain undeveloped. Although there are independent power producers (IPPs) in the Kenyan power sector, all of the country’s large hydro schemes are operated by KenGen.
The last substantial increase in Kenyan hydro capacity was the new 81.5MW unit that was added to the Gitaru plant in 1999, although the 60MW Sondu/Miriu venture should come into use in the near future. The project was due to come on stream in early August but water levels were too low and a substantial delay in bringing it on stream is now expected. The 60MW facility is expected to produce an average of 330GWh a year and has attracted US$98M in financial support from the Japan Bank for International Cooperation (JBIC).
Sondu/Miriu does not include a substantial dam but rather a 6.2km tunnel and surface mounted penstock to take water down the Nyakach Escarpment to the turbines. Water will be returned to the Sondu River 13km downstream of the intake via a 4.7km outlet. In addition, KenGen has constructed a 50km transmission line to connect the plant to the Kisumu substation. Once the Sondu/Miriu plant is completed, KenGen will have 737MW of installed hydroelectric generating capacity.
The capacity of the two Kiambere turbines is to be increased by 12MW by the end of this year, taking total capacity at the plant to 164MW. In addition, the height of the Masinga dam is being increased by 1.5m at a cost of US$12M to boost water storage capacity in the entire Seven Forks Cascade by 12%. This will hopefully boost output along the length of the Cascade. Existing technology is also being upgraded. For instance, two new governors have been delivered to Kindaruma and will be installed this year.
A large number of attractive sites have yet to be developed. The small 2MW Gogo plant was originally built to serve mining needs and could be expanded to 60MW but transmission problems in the southwest area would have to be tackled first. Downstream of Sondu/Miriu, KenGen plans to construct the 21.2MW Sang’oro plant and has already secured a US$46.6M loan from JBIC to cover all costs. Finally, a third 20MW unit could be added to Kindaruma and there is some potential for small hydro development in the country. However, while the existing five plants on the Seven Forks Cascade have an average availability of about 96%, a high figure by regional standards, most other potential hydro sites beyond the Cascade would not offer such a high degree of reliability.
Ugandan options
The untapped Seven Forks sites aside, KenGen is more likely to rely on supplies from Ugandan dam projects than hydroelectric schemes on other Kenyan rivers. The government of Uganda has long touted the country as the powerhouse of East Africa, with large untapped hydro potential waiting to be developed to drive economic growth across East Africa. Yet the country still has just 300MW of capacity and suffers from its own power shortages, as a decade of frustration over the Bujagali scheme deterred interest in the country’s other planned dam ventures.
However, construction work on Bujagali began late last year, reigniting enthusiasm for the landlocked nation’s other proposed hydro projects. At present, Uganda relies on the 180MW Nalubaale and 120MW Kiira hydro schemes, both of which lie on the Ugandan stretch of the Nile, north of Lake Victoria. Bujagali, which will be located downstream of the existing two dams, has long been mooted as the next most attractive hydro site in the country but funding problems held up development for many years.
As many readers of IWP&DC will already know, the World Bank completed its programme of “extensive economic, environmental, and social due diligence” on the project last April and decided to provide financial support. This will comprise an investment guarantee of up to $115M from the Multilateral Investment Guarantee Agency; a $130M loan from the International Finance Corporation; and $115M from the International Development Association.
World Bank support has also encouraged other multilateral funding bodies to provide credit, including the European Investment Bank, with $135M and $110M from the African Development Bank. The scheme is to be developed and operated by Bujagali Energy Ltd (BEL), a joint venture of Industrial Promotion Services (IPS) of Kenya and US firm Sithe Global Power. IPS is the industrial development arm of the Aga Khan Fund for Economic Development. It is hoped that Bujagali will help to satisfy demand within the Ugandan market but BEL also expects to make a significant proportion of production available for export.
A large number of companies are involved in Bujagali, including the turnkey contractor, Salini of Italy, and substantial progress has already been made on turning the project into a reality. In February, alstom Projects India received an order for five Kaplan 51MW turbines and hydro mechanical equipment, while in June BEL awarded a $3.8M contract to engineering company MWH to provide technical assistance over four years.
Bujagali aside, the Ugandan government is keen to bring other hydro capacity on stream, both to guarantee domestic supplies and to raise much needed export income. The junior energy minister Simon D’ujanga said that construction of the Karuma scheme, which lies on the Nile downstream from Bujagali, will begin next year. The ministries of energy and finance have been instructed to fast track its development, which will be carried out by a public private partnership of Norwegian firm Norpark and the government of Uganda. Investment of about US$450M will be required to provide generating capacity of 240MW.
D’ujanga said that the development of Karuma will not be impeded in the way that held up Bujagali. He argued: “Karuma is different and we’re sure work will start next year because already we have some money.” However, additional funding is likely to be needed, either from the World Bank or other multilaterals, so Kampala may be ambitious in expecting construction work to begin in 2009. Looking further ahead, plans have already been drawn up for the 100MW Isimba project, while the generating capacity at the existing Kiira scheme could be increased to 200MW.
The government has proposed the construction of a 100MW thermal power plant to inject an element of diversification into the generation mix. Oil has now been discovered in the Lake Albert Basin that ministers have suggested could be used as power sector feedstock but it remains to be seen whether field operator Tullow Oil & Gas would prefer to market its production as a vehicle fuel. Record international oil prices make an oil fired power plant an odd choice at a time when other oil fired capacity is being converted to run on natural gas. On balance, it seems that Uganda will continue to rely heavily on hydroelectric production.
Stiegler’s Gorge
Further south, African specialist Energem Resources plans to develop a 900MW hydro scheme at Stiegler’s Gorge on the Rufiji River in Tanzania. Development, however, is by no means certain, as the project was originally planned by Norwegian donors in the 1980s and then shelved because of limited regional demand at that time. Energem provided Infrastructural Development Finance (IDF) with just a $1.2M loan to secure a 40% share in the venture in May, leaving IDF with 40%, the Rufiji Basin Development Authority 10% and private investors the remaining 10%. Energem chairman Brian Menell commented: “The indications are that it’s a robust project – subject to the updating of the feasibility study, which will be completed over the coming months.”
Construction costs are already estimated at about US$2B, so securing the required funding may not be easy. Menell said: “The intention is to end up with a significant position in this large and desirable project without significant cash equity participation”, suggesting that sizeable donor support and investment from additional sources will be required. World Bank support will be crucial, particularly given its new found enthusiasm for large hydro ventures in Africa, but the fact that Stiegler’s Gorge is located in the Selous Game Reserve, the second biggest protected area in Africa, could prove a stumbling block.
If the Rufiji dam is developed, it would be the biggest hydro scheme in East Africa and would provide a huge increase in the region’s generating capacity. The EAC aside, it could also export electricity to Zambia but a great deal of production could be absorbed domestically. After decades of economic stagnation, the reforms of the past 20 years have resulted in economic growth in Tanzania consistently in excess of 5% a year and a boom in mining industry activity that will require much greater power supplies within a decade.
At the other end of the consumption scale, the Tanzanian government hopes to use renewables to drive its rural electrification programme. At the Washington International Renewable Energy Conference (WIREC) in March, it pledged to provide electricity to one million rural inhabitants by 2023 through renewable energy projects, with small hydro and wind power schemes the most likely options. The programme is being backed by a US$105M loan and US$6.5M grant from the World Bank’s Global Environment Facility (GEF). John McIntire, the World Bank’s country director for Tanzania, said: “It will also establish a sustainable basis for energy access expansion and support the global objective of reducing carbon dioxide emissions by reducing barriers to renewable energy development.”
Northern Tanzania’s booming mining sector is expected to source part of its power requirements from wind turbines but small hydro schemes are likely to be a popular option in much of the rest of the country, particularly as state power company Tanesco already has a great deal of experience in the sector. Table 2 lists the most prospective small, mini and micro hydro sites identified by the company, which would collectively account for about 175MW of new generating capacity. Total national small hydro potential is 300MW but most sites have not yet been developed because it would be too expensive to connect them to the national grid. However, the new emphasis on rural electrification makes such projects more rather than less attractive precisely because such remote rural areas are distant from the grid.
One of the most potent symbols of power sector integration in East Africa could be a new 60MW hydro scheme planned for the Rusumo Falls on the Kagera River in northwest Tanzania. In March, the governments of Tanzania, Rwanda and Burundi agreed to jointly develop the project, with each country taking a 20MW share. A feasibility study on the scheme has been launched and the three governments have appealed to the World Bank and African Development Bank for support. The government of Burundi hopes that increased power supplies will enable nickel mining in the country, which currently relies on electricity imports from Democratic Republic of Congo. The main doubt over the Rusumo Falls project centres on the resettlement of an estimated 7000 people who live in the area – a high number considering the limited generating capacity on offer.
The hydro sector currently accounts for the lion’s share of electricity produced in East Africa and is likely to continue to do so for a long time to come. Some thermal capacity may be added, particularly in Tanzania, where gas reserves are being developed, but as in most of Africa hydro remains the cheapest form of power production. With small hydro an excellent method of promoting rural electrification, it seems clear that East Africa will provide a growing market for companies involved in the hydro industry for years to come.
TablesTable 1 Table 2
