Mumias Sugar seeks to double Power prices
Sugar miller Mumias wants to double the price at which it sells electricity to Kenya Power KPLC, a move that would raise the cost of energy from its cane-based plant to match that of solar producers. The miller, which currently sells power to the electricity distributor at Sh6.1 per kilowatt-hour (kWh), is seeking to raise it to Sh12.2 per unit in three years.
“The company is successfully negotiating an increase in electricity selling price from the current $0.06 (Sh6.1) to $0.12 (Sh12.2) per kilowatt-hour in 2020,” Mumias says in its latest annual report.
At Sh12 per unit, Mumias’ target price will match that of solar power producers and will be second only to thermal generators which currently charge Sh20 per unit. Geothermal power is currently priced at an average of Sh8 per kWh while hydro is the cheapest at Sh3 per unit.
The higher price is subject to the Energy Regulatory Commission’s approval. The tariff review is part of the company’s four key medium-term changes it says are critical if it is to avoid booking further losses in the value of its factories and properties.
The proposed raise comes almost 5 weeks after the miller resumed selling electricity to Kenya Power. According to the Company’s communication manager, Mumias Sugar has already offloaded in excess of 3000Mwh of power to the national distributor. The miller uses 45% of the power it produces to run its own machines with the rest being exported to the national grid.
In a deal last month, the two firms revised terms of engagement and removed punitive clauses in the agreement. The clauses had seen Mumias slapped with a huge fine by Kenya Power for failure to supply electricity to the grid as stated in the initial agreement.
It remains to be seen if these efforts will dent the Millers huge liabilities and set it on course to full recovery.