Four KTDA tea factories, Chebut, Kaptumo, Kapsara, and Mudete, have signed Power Purchase Agreements (PPAs) with Chemuka Power Company for the development of a 2.8-megawatt small hydropower project.
Chemuka Power Company is a Special Purpose Vehicle (SPV) jointly formed by four tea factory companies, in conjunction with the KTDA Power Company (KTPC) Limited, to own and implement the hydropower project on their behalf.
The project is located along River Yala at Taunet village near Tindinyo Shopping Center in Nandi County; with power generated by the plant being consumed by the tea factories and any excess sold to Kenya Power and Lighting Company (KPLC) as per signed Power Purchase Agreements (PPAs) between the Factories (who are the buyers of the power) and the seller Chemuka Power Company (which is the selling entity).
On commissioning, Taunet will supply power to Chebut, Kaptumo, and Mudete Tea Factories; while Kapsara Tea Factory will benefit from the project through a power wheeling arrangement which is being pursued with KPLC due to its distance from the project; and while awaiting the development of Phase two of the project – which will be located at Kapolet.
Speaking during the signing ceremony, KTDA Board Member representing Zone 12, Abungana Khasiani, said:
“The power project will serve our factories as part of our medium-to-long-term strategic initiatives aimed at enhancing earnings for the smallholder tea by reducing operation costs and passing the benefit to the farmers. We look forward to the development of the project to completion for the benefit of all farmers represented by the four participating factories.”
The Project will be funded through debt from financiers and equity from shareholders at a debt-to-equity ratio of 65:35.
The project is part of KTDA’s strategic endeavor to reduce operating costs, increase power supply reliability, and reduce greenhouse gas emissions during tea processing, which has seen KTDA embark on small hydropower generation among other initiatives with a view to improving earnings for the small-scale tea farmers. The power development and management initiatives are undertaken by KTDA Power Company (KTPC) Limited, a wholly-owned subsidiary of KTDA (H) Limited.
So far, 15 KTDA factories are connected to five small hydropower development projects as part of this initiative. The five hydropower projects are Imenti, Bura, Metumi, Chania, and Nyakwana.