Kenya's biggest tea producer to generate own power

NAIROBI (Reuters) - Kenya Tea Development Agency (KTDA), the biggest producer of tea leaf in the country, plans to generate its own electricity to cut reliance on the national grid which is rationing power, a senior company official said.

Kenya is the global leader in exports of black tea and output has drop significantly this year because of drought.

The lack of rain has resulted in a power rationing program because of low output by the country's hydropower generators.

KTDA now hopes to develop 10 sites with proven hydropower potential, Fred Gori, KTDA's Corporate Affairs Manager, said on Tuesday.

"From those 10, we are looking at about 22-23 megawatts (MW). We are in talks with the energy ministry and they are helping us to identify some cheap sources of funding," he said.

One farmers' factory in Imenti, near Mt. Kenya, is already producing 1 MW from a micro-hydropower project.

Gori said it cost 160 million shillings ($2 million) to put up the plant. The 5,189 farmers there contributed a portion of the money and KTDA guaranteed a loan for the remainder.

Last June, Imenti signed a power purchase agreement with the Kenya Power and Lighting Company to buy any surplus.

There are plans to set up a 2 MW hydro project on Gura River in Nyeri to provide electricity to four factories, he said.

"We don't dam at all. We don't affect the course of river so the community around the river is not affected in any way."

TREES FOR FUEL WOOD

All 60 KTDA factories around the country are also required to plant at least 100,000 indigenous trees annually, he said.

"We are very aware that our own hydropower projects will not be sustainable if we don't have water," Gori said. "The indigenous trees are grown purely to protect the environment and not for harvest."

Some factories are however also growing some trees for fuel wood because furnace oil prices have been too high, he said.

KTDA plans to set up a subsidiary company to consolidate all its energy plans around the country, he said.

KTDA farmers, mostly small scale growers, produce an average 60 percent of overall Kenyan output, which in 2008 stood at 345 million kg and 369 million in the previous year.

Electricity costs amount to almost a quarter of the 55 shillings it takes to process made tea, Gori said.

Many factories east of the Rift Valley in regions like Murang'a, Meru, Nyeri and Kirinyaga, are now operating at 30 percent of their capacity because of drought and cold weather.

Farmers usually take advantage of decreased production over the June-August cold season to prune bushes but lack of rain in the last three months has meant normally low output has fallen even further.

Farms west of the Rift, like in Kericho, have fared better.

"We are hoping that once the rains start, perhaps in September, green leaf will increase but you also expect that sufficient rains will help with the power situation."

(Editing by Anthony Barker)