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"id": 187816,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/187816/?format=api",
"text_counter": 215,
"type": "speech",
"speaker_name": "Mr. Murungi",
"speaker_title": "The Minister for Energy",
"speaker": {
"id": 93,
"legal_name": "Kiraitu Murungi",
"slug": "kiraitu-murungi"
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"content": "Mr. Temporary Deputy Speaker, Sir, the skyrocketing global energy prices have dangerous repercussions for our economy. As you may have noted both in the local and international Press, there is global unrest due to high energy prices basically dubbed, \"Food and Fuel Crisis\". In the whole of Africa, there is a chronic power shortage largely due to under investment in electricity generation, transmission and distribution infrastructure. Kenya is caught up in this difficult energy situation. Petroleum and electricity are the main sources of commercial energy in Kenya. Fuel wood is the primary source of energy used to meet domestic energy needs, especially of our rural and urban poor. Over 80 per cent of our people do not have access to modern energy services such as electricity or liquefied petroleum gas. They still depend on wood, crop residues, cow dung and other biomass to meet their cooking and eating needs. The availability of wood fuel in adequate quantity in an environmentally sustainable manner is a major challenge, especially to people in our rural areas. To address this challenge, my Ministry has embarked on an ambitious programme to meet the energy needs of the poor through what we are calling The Kenya Energy Sector Environment and Social Responsibility Programme. It is intended to supply firewood to the rural Kenya. Hon. Members will recall that this programme was launched by the Right Honourable Prime Minister at KICC in June, 2008. We have identified women and youth groups all over the country to be our key stakeholders and drivers of this project. We are working with Maendeleo ya Wanawake on the wood fuel project and we shall soon be discussing with hon. Members on ways of involving the youth in the various constituencies in this project. Mr. Temporary Deputy Speaker, Sir, in the area of electricity supply, we are struggling to keep up with demand which is currently about 1,100 megawatts relative to an effective generation capacity of 1,147 megawatts. The current demand/supply balance leaves no room for maintenance of big and low power units with rated capacities of, at least, 53 megawatts each. Under dry weather conditions, this effective generation capacity falls substantially below demand depending on the intensity of the drought. It is for this reason that a temporary thermal capacity of about 46 2150 PARLIAMENTARY DEBATES July 29, 2008 megawatts has been installed by the Government through the Independent Power Producers (IPPs). To address this weak supply/demand balance, my Ministry has put in place appropriate measures to increase the generation capacity in tandem with the rising demand for electricity which is projected to grow at 7.9 per cent per annum between now and the year 2020. In this respect, arrangements are in place for the installation of a new power plant with a combined capacity of 315 megawatts within the next two years. In electricity distribution, KPLC has continued to enhance its efforts to connect more people. In the fiscal year 2006/2007, the company connected 122,080 new customers across the country. In the following year, 2007/2008, the company connected 140,807 customers. We are set to connect one million customers between now and the year 2012. It is worth of note that since this country was founded by the British colonialists in 1897, it took 110 years to connect one million customers. We connected the 1 millionth customer in December, 2007. We have a very ambitious project of connecting one million customers in the next five years. So, we shall have done what all the successive Governments, that is, the colonial Government, the Kenyatta Government and the Moi Government did over 110 years, in five years. I need the support of hon. Members to implement this ambitious project. Mr. Temporary Deputy Speaker, Sir, regarding petroleum fuel, the ultimate solution to high petroleum prices in this country is discovering our own oil and gas. Although we have made many efforts, Kenya is yet to discover any commercial deposits of hydro-carbon reserves. This is largely due to under-investment and under-exploration in the area of oil and gas, that is, in the upstream sector of this country. In the last three years, we have intensified oil exploration activities and most of the country's blocks are now under exploration contracts. We are hopeful that we will soon discover commercial deposits of both oil and gas. I believe that we have oil and gas somewhere in this country. It is only a matter of time before we discover it. The Government's objective of providing affordable petroleum products for accelerated socio-economic development is faced with major challenges because of the recent increase of crude oil prices from US$62.1 per barrel in April, 2007 to roughly US$140 per barrel in July, 2008. This reflects an increase of more than 100 per cent. Its impact on our oil pump prices and, indeed, the entire economy has been traumatic. Due to this unprecedented increase in local pump prices, there have been calls from several quarters for the Government to subsidise consumer prices and also to introduce price controls. As a Ministry, we have been reluctant to introduce price controls because this could result into product shortage which used to be the order of the day during the days of price controls. We can say this with confidence because my Permanent Secretary, Mr. Patrick Nyoike, was the Price Controller in 1980 and he understands the impact that there was in this sector during that time of price controls. The Government is concerned about high domestic prices of petroleum fuels as they adversely impact on the economy. To address this challenge, the Government is taking steps to strengthen the National Oil Corporation of Kenya (NOCK) so that it can become a market leader and, indeed, a price setter in this sector. The Government has provided funds to NOCK to acquire 13 retail outlets formerly owned by the BP Kenya, and it is also in the process of facilitating acquisition of a further 33 outlets owned by Somken Kenya Limited. In addition, we are looking out for any new opportunity to enable us expand NOCK's petroleum business and we shall exploit them as they become available. Mr. Temporary Deputy Speaker, Sir, as part of this strategy, we have appealed to the Government to ensure that all Ministries and departments, including parastatals, are encouraged and required to purchase all their petroleum products from NOCK, or its appointed agents in order to reduce the cost of oil supply. It is hoped that the expansion of NOCK's oil distribution and retail network will enable the corporation to play a significant role in the Kenyan market, and thus help July 29, 2008 PARLIAMENTARY DEBATES 2151 reduce domestic prices of petroleum fuels. While the most viable long-term solution for Kenya, as I said, is to find her own oil reserves, the Government has planned to establish strategic petroleum reserves of up to 90 days of consumption as provided for in the Energy Act, No.12 of 2006, and the attendant Legal Notice No.43 of 2008. These strategic stocks, once procured, will be utilised from time to time to stabilize domestic prices and to ensure security of supply in the event of disruptions in the supply chain. With those introductory remarks, it is now my wish to elaborate on the activities which I seek approval of this august House to spend a sum of Kshs30,386,871,711 on development activities and Kshs372,581,207 on recurrent support services during this financial year. During this financial year, my Ministry is proposing to spend Kshs131,940,000 under the multi-donor funded Energy Sector Recovery Project to undertake the following activities. Mr. Temporary Deputy Speaker, Sir, a sum of Kshs100,640,000 has been budgeted to support capacity building by the Ministry as follows: Kshs21,240,000 will be used to undertake a feasibility study on the development of a 300 megawatts coal, fire and plant, and to carry out an environmental and social impact project under related power distribution and transmission systems at a cost of Kshs63 million. As you are aware, the Energy Regulatory Commission (ERC) established under the Energy Act, No.12 of 2006, became operational on 1st July, 2007. To strengthen its operational capacity, a sum of Kshs30,800,000 has been set aside to finance development of a business plan, and to support capacity-building related services. My Ministry is proposing to spend Kshs12,018,650,000 to complete a study on the demand for petroleum products in Kenya, which was started during the previous financial year. The result of this study, which is scheduled in November 2008, will be used to determine the size and timing of the construction of a second oil pipeline from Mombasa to Nairobi. In addition, my Ministry is proposing to spend Kshs1 million for project monitoring and evaluation. Under Head 430, Wood Fuel Resource Development, we are proposing to spend Kshs338,900,000. Under this Head, my Ministry is proposing to spend Kshs225 million for the purchase of land to expand the existing Wambugu and Migori energy centres, and to establish three new energy centres. These activities will accelerate expansion and introduction of new and renewable sources of energy, including solar electricity generators, solar water heaters, wind power systems and growing of biofuel crops such as Jatropha. My Ministry has also set aside Kshs100 million for the promotion and popularization of the benefits of environmental conservation and installation; specifically, this will entail creation of a culture of efficient use of energy and promotion of commercial tree growing, including suitable crops, for production of biofuels. These activities will be implemented under the umbrella of the Kenya Energy Sector Environmental and Social Responsibility Programme and the energy centres. The balance of Kshs13,900,000 will be used for the purchase of certified crop seed, training and research and development and demonstration in energy centres. Mr. Temporary Deputy Speaker, Sir, my Ministry is proposing to spend a sum of Kshs50,100,000 to undertake various renewable energy activities that will include conducting feasibility studies on 12 small hydro power sites in western and central Kenya, and the purchase and installation of more wind masts and data loggers to facilitate selection of suitable sites for harnessing wind power for electricity generation. Mr. Temporary Deputy Speaker, Sir, in recognition of the benefits associated with adoption of energy efficiency and conservation, efforts geared towards reduction of the cost of energy to manufacturers, my Ministry will continue to support the Kenya Association of Manufacturers (KAM) with Kshs30 million for promotion of efficient, but cost effective energy systems among its membership. Provision has been made of Kshs6.9 billion under my Ministry for remittance to KENGEN 2152 PARLIAMENTARY DEBATES July 29, 2008 to cover the cost of temporary rental generation capacity of 146 megawatts, including Excise Tax and levies imposed on diesel for emergency power generation. My Ministry is further proposing to spend a sum of Kshs2,165,472,475 to upgrade the power distribution system of the Kenya Power and Lighting Company (KPLC) through the multi- donor- funded Energy Sector Recovery Project. The bulk of these funds, that is Kshs1,785,000,000 will be provided by the World Bank, the European Investment Bank, the Nordic Development Fund and the French Agency for Development. Mr. Temporary Deputy Speaker, Sir, the balance of Kshs380,472,475 will be provided by Kenya Power and Lighting Company as their counterpart contribution. In addition, the Government of China will provide Kshs700 million for construction of transmission lines and associated distribution networks to upgrade the quality of power supply in Nyanza Province and part of Eastern Province. Further to this, the Government of Belgium will provide an additional sum of Kshs300 million for the construction of a transmission line and associated distribution network to improve the quality of power supply in the South Coast, and another Kshs200 million for construction of a 5.3 megawatts wind power plants. My Ministry has further allocated a sum of Kshs760 million out of which Kshs710 million will be used for construction of new transmission lines, while the balance of Kshs50 million will be used to finance establishment of a new power transmission company later this year. The new transmission company is expected to provide a major relief to consumers of electricity as electricity tariffs will not be raised to provide requisite funds for construction of new transmission lines, since the construction of such lines will be funded by the Exchequer through this company. Mr. Temporary Deputy Speaker, Sir, the ultimate solution for affordable electricity in this country will be the development of our vast geothermal resources. My Ministry is proposing to spend Kshs4,497,300,000 from Exchequer resources on Olkaria IV for drilling steam production wells for electricity generation. It is critical that this drilling campaign will support the proposed 270 megawatts geothermal power plants to be intensified as geothermal energy is the only available domestic resource for generation of low cost environmental-friendly electricity. In addition, a sum of Kshs2,257,340,586 has been provided as a loan from the World Bank, the European Investment Bank and AFD of France under the Energy Sector Recovery Project for development of a third 35 megawatts geothermal power units at Olkaria II Power Station. The Kenya Electricity Generation (KENGEN) Company will provide a sum of Kshs57,340,586 as its counterpart contribution to this project. Mr. Temporary Deputy Speaker, Sir, as I said, we have a very ambitious Rural Electrification Programme (REP) through which we intend to connect one million households to electricity in the next five years. In this financial year, my Ministry is proposing to spend a total of Kshs11,553,300,000 under the REP. The Ministry proposes to spend this amount as follows: Kshs450 million from the Government of France, and Kshs400 million from the Spanish Government, both for rural electrification. A sum of Kshs5,146,978,000 will be directly from the Exchequer and local Appropriation- in-Aid (A-in-A) for rural electrification. A sum of Kshs300 million will be for installation of solar electricity, generators in schools, dispensaries and health centres in ASAL areas. A sum of Kshs17 million will be grant funds from the Government of Finland for updating the Rural Electrification Master Plan, which we expect to complete in September, 2008. Mr. Temporary Deputy Speaker, Sir, my Ministry is undertaking coal exploration drilling in Mui Basin, in the greater Kitui and Mwingi Districts. So far, 26 wells have been drilled and good quality coal has been identified. It is on this basis that my Ministry is requesting the approval for Kshs30,758,952,919 to cover both Development and Recurrent Expenditure for this fiscal year. I am, therefore, pleading with Members of Parliament to support us. July 29, 2008 PARLIAMENTARY DEBATES 2153 With those remarks, I beg to move and invite Dr. Wekesa to second the Motion."
}