The government of Kenya has agreed to start importing electricity from Ethiopia at US$0.07 per kilowatt hour at what the Kenyan Ministry of Energy describes as a competitive rate.
The deal to import 400 megawatts (MW) was reached between Kenya’s Ministry of Energy and Ethiopia’s Ministry of Water and Energy, but they have not reached final agreement on pricing.
“The proposed power import is based on a feasibility study jointly undertaken by Kenya and Ethiopia,” said Kenyan energy permanent secretary Patrick Nyoike in a statement.
Construction of the interconnector is expected to start in early 2013 and end by 2016 at a cost of US$1.2 billion, and is being funded by the World Bank, French Development Agency and African Development Bank.
The power agreement is part of the Kenyan government’s effort to increase the country’s installed electricity capacity to 3,868MW by 2016, up from the current 1,394MW.
The plan is also expected to address the chronic power shortages that constantly push the country to adopt more expensive thermal power, thus fuelling high consumer prices.
The power purchasing agreement with Ethiopia is the second Kenya has had after a similar arrangement more than a decade ago where Kenya imported about 30MW from Uganda.
But unlike Uganda, which only serves Western Kenya, the Ethiopian supply will be fed into the national grid, making it available country-wide.
Hydro-power accounts for more than half of power generation in Kenya, followed by thermal and geothermal sources.