upepo
Elder Lister
By Ephraim Njenga
This Adani KETRACO deal leaves many questions to be answered. The more I think about it, the more I wonder if we have gone mad as a country. That someone has even concocted such a deal amounts to a grave insult to our intelligence. I was shocked to hear the president say that the deal would lead to a cheaper cost of power. I will address that later in the post. Adani is constructing three transmission lines namely 96km, 220kV Ronga-Keringet-Chemosit, 206 km 400 kV Gilgil-Thika-Malaa-Konza and 70 km 132 kV Menengai-Ol Kalou-Rumuruti. The total distance of these lines is 372 km. The total cost is KSh 96 billion. Two substations will also be constructed in Rongai and Thurdibuoro.
According to KETRACO these are the costs for the bipolar 500 kV HVDC Ethiopia-Kenya transmission line; "The 612km transmission line in Kenya has been broken into Lots 4, 5 and 6 whose tenders were respectively awarded to KEC International Ltd-India, Larsen and Toubro Limited Power Transmission and Distribution and Kalpataru Power Transmission Ltd, India at a total cost of USD 140 Million." -(Sources KETRACO website.) So a 612 km transmission line cost USD 140 million but 372 km of lower specs transmission lines will cost us USD 737 million (initial cost in March 2024 was USD 1.014 billion). Regime defenders will talk about inflation but how much inflation has happened since Nov 2022 when this line was completed? Has the cost of goods risen by 7 times in two years?
To look at it another way. The total KETRACO transmission network as of June 2023 was 5,476 km. The historical cost of the network including work in progress is KSh 205 billion translating to KSh 37 million per km. Adani is doing 372 km at KSh 96 billion translating to KSh 258 million per km. Does this make sense? KETRACO masterplan till 2042 proposes to construct 11,131 km of transmission lines at a cost of $4.778 billion (KSh 621 billion at the current exchange rate KSh 130/dollar) translating to KSh 56 million per km. Adani's initial quote translated to KSh 354 million per km which is 6 times what KETRACO had estimated in the Masterplan. If this is not madness tell me what is?
According to KETRACO press release, in March Adani had quoted $1.014 billion and then reduced it to $737 million in August 2024. This is a reduction of $278 million (KSh 36 billion) or 27%. If this is not evidence of cost inflation what is? KSh 36 billion is a very huge amount of money. It cannot be overquoted by mistake and reduced "following negotiations" as per KETRACO. KETRACO says the annual revenue requirement for the deal is $164 million. At an exchange rate of KSh 130/dollar, this translates to KSh 21.32 billion per year. Which adds up to KSh 640 billion for the 30 years Adani will be running the lines. Remember earlier in the post we needed KSh 621 billion to construct 11,131 km of transmission lines till 2042. So we are paying a higher amount to construct 372 km of lines than will cost us to construct 11,131 km of lines. These are the deals Magufuli once said can only be signed by mad people.
Let us go back to the president's claim that the deal will lead to a cheaper cost of power. The 372 km Adani lines are just 6.8% of the 5,476 km of transmission lines KETRACO had in June 2023. The claims by KETRACO that the Adani project will lower power losses and result in tariff reduction are nonsensical. What impact can an additional 7% of lines have? Between 2019 and 2023 KETRACO increased its network by 3,438 km representing a growth of 59%. Did that lower the cost of power? What is so special about the Adani lines? Are they magic lines? If the Adani deal annual revenue requirements amounts to KSh 21 billion per year it means that the cost of power will rise by about KSh 2 per unit. How can this reduce the cost of power?
In the financial year ending June 2023, KETRACO only earned KSh 3 billion as wheeling charges from Kenya Power. Yet we are being told Adani will be paid KSh 21 billion per year? In other words, 5,476 km of transmission lines earn KETRACO KSh 3 billion per year but 372 km of transmission lines will earn Adani KSh 21 billion per year. Help me make sense of this. Some might think this is a work of fiction. But all this is an analysis based on information contained in KETRACO's press release on the Adani deal as well as KETRACO's audited financial statements for the year ending 30th June 2023. If this doesn't make you angry, then you need an urgent medical check-up.
This Adani KETRACO deal leaves many questions to be answered. The more I think about it, the more I wonder if we have gone mad as a country. That someone has even concocted such a deal amounts to a grave insult to our intelligence. I was shocked to hear the president say that the deal would lead to a cheaper cost of power. I will address that later in the post. Adani is constructing three transmission lines namely 96km, 220kV Ronga-Keringet-Chemosit, 206 km 400 kV Gilgil-Thika-Malaa-Konza and 70 km 132 kV Menengai-Ol Kalou-Rumuruti. The total distance of these lines is 372 km. The total cost is KSh 96 billion. Two substations will also be constructed in Rongai and Thurdibuoro.
According to KETRACO these are the costs for the bipolar 500 kV HVDC Ethiopia-Kenya transmission line; "The 612km transmission line in Kenya has been broken into Lots 4, 5 and 6 whose tenders were respectively awarded to KEC International Ltd-India, Larsen and Toubro Limited Power Transmission and Distribution and Kalpataru Power Transmission Ltd, India at a total cost of USD 140 Million." -(Sources KETRACO website.) So a 612 km transmission line cost USD 140 million but 372 km of lower specs transmission lines will cost us USD 737 million (initial cost in March 2024 was USD 1.014 billion). Regime defenders will talk about inflation but how much inflation has happened since Nov 2022 when this line was completed? Has the cost of goods risen by 7 times in two years?
To look at it another way. The total KETRACO transmission network as of June 2023 was 5,476 km. The historical cost of the network including work in progress is KSh 205 billion translating to KSh 37 million per km. Adani is doing 372 km at KSh 96 billion translating to KSh 258 million per km. Does this make sense? KETRACO masterplan till 2042 proposes to construct 11,131 km of transmission lines at a cost of $4.778 billion (KSh 621 billion at the current exchange rate KSh 130/dollar) translating to KSh 56 million per km. Adani's initial quote translated to KSh 354 million per km which is 6 times what KETRACO had estimated in the Masterplan. If this is not madness tell me what is?
According to KETRACO press release, in March Adani had quoted $1.014 billion and then reduced it to $737 million in August 2024. This is a reduction of $278 million (KSh 36 billion) or 27%. If this is not evidence of cost inflation what is? KSh 36 billion is a very huge amount of money. It cannot be overquoted by mistake and reduced "following negotiations" as per KETRACO. KETRACO says the annual revenue requirement for the deal is $164 million. At an exchange rate of KSh 130/dollar, this translates to KSh 21.32 billion per year. Which adds up to KSh 640 billion for the 30 years Adani will be running the lines. Remember earlier in the post we needed KSh 621 billion to construct 11,131 km of transmission lines till 2042. So we are paying a higher amount to construct 372 km of lines than will cost us to construct 11,131 km of lines. These are the deals Magufuli once said can only be signed by mad people.
Let us go back to the president's claim that the deal will lead to a cheaper cost of power. The 372 km Adani lines are just 6.8% of the 5,476 km of transmission lines KETRACO had in June 2023. The claims by KETRACO that the Adani project will lower power losses and result in tariff reduction are nonsensical. What impact can an additional 7% of lines have? Between 2019 and 2023 KETRACO increased its network by 3,438 km representing a growth of 59%. Did that lower the cost of power? What is so special about the Adani lines? Are they magic lines? If the Adani deal annual revenue requirements amounts to KSh 21 billion per year it means that the cost of power will rise by about KSh 2 per unit. How can this reduce the cost of power?
In the financial year ending June 2023, KETRACO only earned KSh 3 billion as wheeling charges from Kenya Power. Yet we are being told Adani will be paid KSh 21 billion per year? In other words, 5,476 km of transmission lines earn KETRACO KSh 3 billion per year but 372 km of transmission lines will earn Adani KSh 21 billion per year. Help me make sense of this. Some might think this is a work of fiction. But all this is an analysis based on information contained in KETRACO's press release on the Adani deal as well as KETRACO's audited financial statements for the year ending 30th June 2023. If this doesn't make you angry, then you need an urgent medical check-up.
