Kenya Tea Development Agency (KTDA) factories in the west of Rift have signed Power Purchase Agreements (PPAs) with a Special Purpose Vehicle for the development of a 2.8-megawatt small hydropower project to cut production cost.

The four factories- Chebut, Kaptumo, Kapsara, and Mudete, want to put up a hydro plant to cut the electricity cost incurred from the national grid.

Chemuka Power Company, which is a Special Purpose Vehicle (SPV) jointly formed by four tea factories, in conjunction with the KTDA Power Company (KTPC) Limited, will own and implement the hydro project on their behalf.

The project is located along River Yala at Taunet village in Nandi County. The power generated by the plant will be consumed by the factories and any excess sold to Kenya Power as per the signed PPAs between the companies and the SPV.

Chemuka Power Company Chairman, Robert Kipkemboi, KTDA Board Member representing Zone 12, Abungana Khasiani (middle), and Chemuka Vice-Chairman, Francis Wanjau during the signing of the agreement
Chemuka Power Company Chairman, Robert Kipkemboi, KTDA Board Member representing Zone 12, Abungana Khasiani (middle), and Chemuka Vice-Chairman, Francis Wanjau during the signing of the agreement

Taunet Hydro will supply power to Chebut, Kaptumo, and Mudete Tea Factories while Kapsara Tea Factory, which is far from the project, will benefit from the project through a power wheeling arrangement being pursued with Kenya Power.

Phase two of the project will see a hydro plant located at Kapolet to benefit Kapsara, which is in close proximity to the factory that is in Cherangani constituency.

Speaking during the signing ceremony, KTDA Board Member representing Zone 12, Abungana Khasiani, said the power project is a medium-to-long-term strategic initiative aimed at enhancing earnings for the smallholder farmers by reducing operation costs and passing the benefit to the producers.

“We look forward to the development of the project to completion for the benefit of all farmers represented by the four participating factories,” said Mr Khasiani.

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 plan to reduce operating costs, increase power supply reliability, and reduce greenhouse gas emissions.

The power development and management initiatives are undertaken by KTDA Power Company 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 include Imenti, Bura, Metumi, Chania, and Nyakwana.