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"id": 210056,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/210056/?format=api",
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"type": "speech",
"speaker_name": "Mr. Murungi",
"speaker_title": "The Minister for Energy",
"speaker": {
"id": 93,
"legal_name": "Kiraitu Murungi",
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"content": " Thank you, Mr. Speaker, Sir. The Assistant Minister is taking the notes as we wait for the other officers to arrive. We are adequate for now. My Ministry has appointed the Kenya Pipeline Company and the Kenya Petroleum Refineries Limited to be the lead implementing agencies for construction of Liquefied Petroleum Gas (LPG) storage and handling facilities in both Mombasa and Nairobi, to be completed in early 2009. Private sector participation is expected to the tune of 50 per cent in equity in the two projects. The construction of these projects is expected to commence by December, 2007. Mr. Speaker, Sir, in the upstream oil and gas sector, Kenya is yet to discover any commercially viable deposits of hydro-carbon reserves. In the past few years, oil exploration activities have been intensified. Most of the country's blocks are now under exploration and, with lack, we hope that we will discover commercially viable deposits in the not-too-distant future. The House may remember that M/s Woodside Energy PLC drilled a dry exploration well in Block L5, off-shore Lamu, in December, 2006. Although we were very disappointed that the well was dry, that well yielded valuable geological data, which is currently being studied and analyzed by a team of Kenyan and Australian geo-scientists in Perth, Australia, and the results of that analysis will provide critical leads to future exploration activities, especially in off-shore blocks in Kenya. The new Energy Act, which was passed by this House in 2006 provides a robust and predictable legal and regulatory framework for effective management of the energy sector, including development of renewable sources of energy such as bio-diesel, power alcohol and charcoal on a sustainable but environmentally-friendly basis. Through this new legislation, three institutions have been set up, namely the Energy Regulatory Commission (ERC), the Rural Electrification Authority (REA) and the Energy Tribunal (ET). The Boards of these new institutions have already been established, and are expected to be operational within the next few weeks. I would now like to elaborate on the activities for which my Ministry is seeking the approval of this august House to spend a sum of Kshs19,529,784,488. During this financial year, my Ministry is proposing to spend Kshs4,294,200,000 on Headquarters and Administrative Services as follows. We intend to spend Kshs40 million on publicity and awareness. The funds will be used to undertake an aggressive awareness campaign to educate Kenyans on the programmes 3058 PARLIAMENTARY DEBATES August 8, 2007 being implemented by my Ministry. They can now access services in line with our vision of providing quality energy services to all Kenyans. This is in line with the Ministry's mission of facilitating provision of clean, sustainable, affordable, reliable and secure energy services at least cost, while protecting the environment. A sum of Kshs4,100,000,000 will be used as budgetary support to Kenya power and Lighting Company (KPLC) Limited and the Kenya Electricity Generation (KenGen) Company Limited. The Government has made a provision of Kshs2 billion to increase temporary diesel- based power generation capacity in order to meet the rising demand for electricity, while permanent power plants are being constructed. In addition, a sum of Kshs2.1 billion has been provided to the KPLC Limited to mitigate the need for consumer tariff adjustment as a result of the rationalisation of the KenGen back tariff for electricity to KPLC Limited, which now stands at Kshs1.76 cents. Mr. Speaker, Sir, we intend to spend Kshs154,200,000 on the Energy Sector Recovery Programme. My Ministry will continue to implement the multi-donor-funded Energy Sector Recovery Project, whose primary objective is to enhance the energy sector operational efficiency, improve the quality of power supply and raise the electricity consumer connectivity as well as increase power generation capacity by 35 megawatts. My Ministry is proposing to spend a total of Kshs154,200,000 to undertake the following activities in support of this project. We intend to spend Kshs59,320,000 for regulatory capacity strengthening and support to the ERC. This amount has been set aside for preparation of a strategic business plan for the ERC, licensing guidelines, model licences, technical regulations and appropriate management information systems for the ERC. We intend to spend Kshs15 million to support the Kenya Bureau of Standards (KEBS). Under the Standards Act, Cap.496, the KEBS is responsible for establishing and enforcing specification for petroleum products. Mr. Speaker, Sir, since the de-regulation of the petroleum sub-sector in October, 1994, there has been tremendous increase in the number of trading companies, some of which engage in bad trading practices, including tempering with fuel dispensing metres and adulteration of motor fuels for commercial gains at the expense of the unsuspecting public. In order to address this illegal business practice, a sum of Kshs15 million has been provided to the KEBS for the purchase of products specification testing equipment to strengthen its regulatory role. We intend to spend Kshs79,880,000 to support capacity building within the Ministry of Energy. This amount has been budgeted to provide capacity building support in the form of training and hiring of consultants. Partly, the funds will be used to undertake feasibility studies on the development of the 300 megawatts core plants based on clean technologies and the unbundling of the KPLC Limited into separate distribution and transmission entities. Mr. Speaker, Sir, we intend to spend a sum of Kshs24,500,000 on Headquarters and Planning. Petroleum products are the main sources of commercial energy in Kenya and are mainly used in transportation, power generation, commercial and industrial sectors. In the past three years, the demand for petroleum products has been growing in tandem with the rapid economic growth which has been witnessed in this country since the year 2003. Secure availability of quality petroleum fuels is, therefore, critical to the maintaining of the momentum of the current economic growth which is in Vision 2030. However, there is need to determine the long term consumption trends for petroleum products in the country and in the surrounding regions. My Ministry is proposing to spend Kshs24 million to undertake a study on the demand of petroleum products up to the year 2030. The results of that study would be used to plan for the expansion of the supply and distribution infrastructure for petroleum fuels in this country and in the surrounding regions. In addition, my Ministry is proposing to spend Kshs500,000 to establish an energy sector data bank and undertake project supervision within the petroleum sector. Mr. Speaker, Sir, under Head 430 - Wood Fuel Resource Development - we intend to August 8, 2007 PARLIAMENTARY DEBATES 3059 spend a sum of Kshs113 million. We intend to spend that amount to facilitate development of wood fuel resources and promote energy conservation in Kenya. Specifically, the Ministry will provide and popularise the benefits of environmental conservation and restoration. That will create a culture of efficient use of energy, promote commercial tree planting in this country and improve peoples' livelihoods through energy and environmental conservation. We have noted that even in areas where we have provided people with electricity, especially in rural areas, they do not use electricity for cooking. Electricity is only used for lighting. People continue to use firewood for their eating and cooking needs. We have, therefore, decided to allocate Kshs113 million to promote wood fuel and encourage tree planting in all the constituencies in Kenya. That amount would be matched with more funds from parastatals within the Ministry or the energy sector. The total programme is likely to cost up to Kshs500 million. Mr. Speaker, Sir, we have also made an appeal to the private sector to support that effort. That programme is intended to create a visible nationwide environmental restoration and conservation project with high impacts and sustainable socio-economic benefits through value adding partnerships with local communities. We also intend to work with women and youth groups to support that massive environmental restoration exercise around the country. Mr. Speaker, Sir, under Head 433 - Alternative Energy Technology - my Ministry is proposing to spend Kshs20,100,000 to undertake various renewable energy activities and studies, including the installation of more wind masts and data loggers for the purpose of collecting wind data to be used in determining suitability of sites for development of wind-based electric power generators. Already, 28 wind masts and data loggers have been installed in various parts of the country. We also intend to spend Kshs4 billion for remittance to KenGen to mitigate adverse effects of Excise Duty and VAT on electricity tariffs associated with the use diesel power generation. My Ministry is further proposing to spend Kshs3,794,245,568 under this Head to upgrade power distribution systems of KPLC. The bulk of those funds - Kshs3,719,202,860 - will be provided by the World Bank, the European Investment Bank, Nordic Development Bank and the French Agency for Development (AFD). The balance of Kshs75,042,708 will be provided by the Kenya Power and Lighting Company as counterpart funding. In addition, the Government of China will provide Kshs429 million for upgrading the quality of power supply in Nyanza Province and upper parts of Eastern Province. My Ministry has further allocated Kshs35 million towards the cost of carrying out a detailed feasibility study on the construction of a high voltage power transmission line - a power inter-connecter - between Kenya and Ethiopia for power imports. We intend to connect our border towns - Moyale and Marsabit - from Ethiopia. Mr. Speaker, Sir, under geothermal resources and exploration, we intend to spend Kshs2,862,738,920. An amount of Kshs410 million will be used for geothermal surface exploration in Northern Rift Valley and for drilling of six appraisal wells in Olkaria Power Geothermal Field in support of a 70 megawatt power plant which is scheduled for commissioning by the year 2010. In addition, a sum of Kshs2,406,629,000 has been provided as loan proceeds from the World Bank, European Investment Bank and KFW of Germany under the Energy Sector Recovery Project for the development of a third 35 megawatts geothermal power plant at Olkalia 11 Power Station. KenGen will provide Kshs46,309,920 as counterpart funding. Mr. Speaker, Sir, under Head 444, which is Rural Electrification, the gross expenditure is Kshs4,87,000,000. That amount will be spent in provision of electricity in the rural areas through grade extension and installation of solar electricity generators in arid and semi-arid schools and health centres at an estimated cost of Kshs3,305,000,000. My Ministry has set up various directorates to implement and ensure that those funds are well spent. In aggregate, I am requesting the approval of Kshs19,857,326,162,000. With those remarks, I beg to Move and I request Mr. Kimunya, the Minister for Finance, to 3060 PARLIAMENTARY DEBATES August 8, 2007 second."
}