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Drought affecting power supply in East Africa

Reports coming out of Kenya say that the national power utility Kenya Power has announced that it will commence an electricity rationing programme in various industrial parts of the county, due to the current generation challenges.

The load shedding programme, which will be implemented on a rotational basis, will be effected for three hours from 6.30pm and last up to 9.30pm.

The firm blamed the unavailability of the contracted 26 MW of electricity from Mumias Sugar Company’s co-generation plant and delayed installation of new power generators due to prolonged procurement procedures as some of the factors that were behind the action.

Reuters reports that low water levels at hydropower dams and a decline in fuel-based power supply were the other factors mentioned. The lion’s share of electricity in the farm-based economy is from hydropower dams, which have been affected by a drought in parts of the country.

This follows the announcement earlier in the year by Tanzania’s state-run power company, TANESCO, that it would have daily 12-hour power cuts for an unspecified period also because of low water levels at hydropower dams and a shortage of fuel for thermal power generation.

East Africa’s second largest economy has been plagued by frequent power-outages since December. This led to the IMF cutting its 2011 growth forecast for Tanzania to 6% from 7.2% in March, saying frequent power outages would hurt output while food and fuel prices could push inflation higher.

The latest round of power cuts caused by a national shortfall of 200 MW came after a deficit of natural gas supply in May led to rolling 16-hour power blackouts.

TANESCO said water levels at the country’s main hydroelectric dams were almost depleted, leading to a reduction in power generation.

Tanzania has energy demand close to 900 MW capacity, but produces less than 800 MW. The government has floated tenders inviting independent power producers to set up emergency power plants this year to generate an additional 260 MW of power. The country’s five-year development plan targets generation of more than 2,700 MW by 2015/16.

Looking at East Africa as a whole, the Economist Intelligence Unit notes that the economic impact of this drought will outlast it, possibly for years. High levels of poverty and dependence on pastoralism for livelihoods in many parts of East Africa mean that drought does not just spell short-term hardship. It can mean long-term misery, as rural households’ main productive assets, livestock (particularly goats and camels), are lost through lack of water for them to drink and plants for them to browse, it noted.

Imara is an investment banking and asset management group renowned for its knowledge of African markets.

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