National Energy Policy - Final Draft - 14 Nov 2013

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PREFACE BY PRINCIPAL SECRETARYIn the past nine years the policy direction of the energy sector has been governed by the SessionalPaper No. 4 of 2004. However, a number of changes have taken place presenting new challengesand opportunities. The Kenya Vision 2030 development blueprint was unveiled in 2008 and theConstitution of Kenya was promulgated on 27 th August, 2010. The achievement of these twomilestones has necessitated the need to review the 2004 Sessional Paper.The energy sector plays a critical role in the socio-economic development of a country. In Kenya,petroleum and electricity as sources of energy are the main drivers of the economy, while biomassis mainly used in rural communities and a section of the urban population. Currently the energysector relies wholly on the importation of all petroleum requirements. However, with the discoveryof oil in Northern Kenya this trend is likely to change. Electricity generation is predominately hydro,supplemented by geothermal and thermal sources. Apart from wood fuel which is overexploited, theother renewable energy resources, though abundant, have not been fully exploited.The major challenges facing the energy sector include improving the quantity, quality and reliabilityof energy supply; high initial capital outlay and the long lead times from feasibility studies todevelopment of energy infrastructure; mobilizing adequate financial resources to undertake massiveinvestment in the power sector, high cost of energy, low per capita incomes, and low levels ofindustrialization.Successful implementation of this policy will require all stakeholders to play their role effectivelykeeping in mind the need to make the vision of affordable quality energy to all Kenyans a reality. Inorder to ensure timely implementation of the policies, programmes and projects of the plan, theministry in charge of energy will put in place mechanisms to monitor progress of implementation andtake any required remedial measures. In particular, an integrated energy sector managementsystem will be set up to cover the Ministry headquarters and all the parastatals under it to facilitateonline transmission of information.The Ministry in charge of energy will provide overall leadership, oversight guidance and policydirections in the implementation of this Policy. To achieve the targets, the Ministry will ensure thatmanagers in parastatals within the sector, not only sign performance contracts but also ensure thatparastatals are prudently managed.The private sector is currently involved in various economic activities in the energy sector such asoil, gas and coal exploration, petroleum distribution and power generation. The Ministry willcontinue to improve the investment environment to encourage more investments in the energysector and involvement by the private sector.Eng. Joseph K. Njoroge, MBSPrincipal Secretary, Ministry of Energy and Petroleum2 NATIONAL ENERGY POLICY FINAL DRAFT NOVEMBER 2013
EXECUTIVE SUMMARY1. This policy document is organised into nine substantive chapters, starting with the Introductionin Chapter 1. Chapters 2 and 3 deal with the primary energy sources, namely Fossil Fuels andRenewable Energy, including electricity generation from geothermal and hydro resources.Chapter 4 deals with the secondary energy source, Electricity, followed by Chapter 5 on EnergyEfficiency and Conservation then Chapter 6 on Land, Environment, Health and Safety.Chapters 7, 8 and 9 deal with Devolution and Access to Energy Services; Energy Financing,Pricing and Socio-Economic Issues; and Cross Cutting Issues, respectively. At the end of thisdocument are the Acronyms and Glossary of Terms used herein.Introduction2. The overall objective of the energy policy is to ensure affordable, sustainable and reliable supplyof energy to meet national and county development needs, while protecting and conserving theenvironment.3. The energy sector is guided the policy set out in Sessional Paper No. 4 of 2004 and governedby a number of statutes, principally the Energy Act, No. 12 of 2006, the Geothermal ResourcesAct No. 12, of 1982 and the Petroleum (Exploration and Production) Act, Cap 308. Withadoption of the Kenya Vision 2030 and the promulgation of the Constitution of Kenya 2010,there is need to review both the policy and all these statutes so as to align them with the Visionand the Constitution; the statutes shall be reviewed and amalgamated into one.Fossil Fuels4. Kenya has had no known commercial reserves of petroleum until March 2012 when oil wasdiscovered in Northern Kenya, leading to a lot of interest in the sector. In order to fast trackpetroleum discovery in other exploration blocks in the country, the Government shall intensifyprimary data acquisition in the available blocks to make them more attractive to investors.5. There is therefore need to develop adequate petroleum production capacity in the country, andalso develop the petroleum supply infrastructure to meet market requirements to match theincreasing demand for petroleum products locally and in the region. These developments willinclude setting up a new refinery at Lamu or Isiolo or other appropriate location. This will makeoil and gas products more competitive in the region, enable creation of wealth, ensure supplysecurity and stability of their prices.6. The Government will ensure that there are strategic petroleum reserves in the country. Theincreased use of LPG shall be encouraged so as to eliminate the use of kerosene in householdsand reduce over-reliance on bio-mass. The Government is also evaluating the possibility ofusing natural gas to support commercial and industrial activities including transportation.7. The average consumption of petroleum products in Kenya has been increasing over the years.To ensure security of supply of petroleum products, the Government will facilitate construction3 EXECUTIVE SUMMARY
Page 1 and 2: NOVEMBER 2013 DRAFTREPUBLIC OF KENY
Page 3 and 4: 2.4.4.1 Challenges in Coal explorat
Page 5 and 6: 4.5.5 Policies and Strategies and I
Page 7 and 8: Table 10.1 Energy Generation Potent
Page 9: FOREWORD BY THE CABINET SECRETARY F
Page 13 and 14: 14. To enhance exploitation of the
Page 15 and 16: 24. The Government shall establish
Page 17 and 18: 1.0 - INTRODUCTION1.1 THE ROLE OF E
Page 19 and 20: (k) Promote appropriate standards,
Page 21 and 22: (e) The Weights and Measures Act, C
Page 23 and 24: fund, mobilizing resources for rura
Page 25 and 26: 2.0 - FOSSIL FUELS2.1 BACKGROUND1.
Page 27 and 28: immense value through acquisition o
Page 29 and 30: and averaging at more than US$110 p
Page 31 and 32: town of Mombasa, through Nairobi to
Page 33 and 34: 3. The prices in Kenya as published
Page 35 and 36: 6. It is hoped that the discovery o
Page 37 and 38: (c) High sulphur levels have advers
Page 39 and 40: Policies and StrategiesPetroleum Ex
Page 41 and 42: Policies and StrategiesPetroleum Su
Page 43 and 44: plants has several advantages over
Page 45 and 46: Natural GasShort Term2014-2017Mediu
Page 47 and 48: 3. The introduction of clean coal t
Page 49 and 50: 6. Lack of a special purpose vehicl
Page 51 and 52: Policies and StrategiesFossil Fuels
Page 53 and 54: 4. Geothermal power plants use stea
Page 55 and 56: about 1,450MW remains unexploited.
Page 57 and 58: 8. Ownership of physical dam reserv
Page 59 and 60: (d) Competing interests between dev
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3.4.2 Challenges1. Unsustainable us
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4. Land will need to be set aside f
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Limited in Kilifi County generates
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high temperatures estimated at 4-6
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Policies and StrategiesSolar Energy
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3. Inadequate wind regime data.4. L
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through co-generation and bioethano
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(d) 1 sea wave energy projects with
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3.12.3 Policies and Strategies and
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4.0 - ELECTRICITY4.1 BACKGROUND1. E
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2. It is estimated that as at 2013,
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Figure 4.2 - Evolution of the Energ
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(e) Thermal power plants have a rel
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6. Nuclear fuel can be recycled and
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Policies and StrategiesNuclear Elec
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Table 4.5 - Planned Regional Inter-
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to this worsening situation leading
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4.5.5 Policies and Strategies and I
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Policies and StrategiesRural Electr
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Policies and StrategiesElectricity
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7. The energy policy and the Energy
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6.0 - LAND, ENVIRONMENT, HEALTH AND
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6.2.3 Renewable Energy1. Generally,
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causes indoor air pollution leading
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6.5 DISASTER PREPAREDNESS AND MITIG
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from the licensee.Policies and Stra
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Policies and StrategiesEnvironment,
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6.7.4.4 Nuclear ElectricityPolicies
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of the risk levels.Policies and Str
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6 It is a further requirement under
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Policies and StrategiesAccess to En
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Kenya.Policies and StrategiesEnergy
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15. Seek financing of clean energy
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Figure 8.1 - Pass-Through Costs in
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Table 8.1 - Energy Tariffs and Cost
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Policies and StrategiesEnergy Prici
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Policies and StrategiesCross Cuttin
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3. In 2009, ERC established a commi
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9.3.3 Policies and Strategies and I
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9.7 ENERGY RESOURCES BENEFITS SHARI
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10.0 - ANNEXURESAnnex 10.1 The PSC
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Table 10.3 Nuclear electricity gene
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Table 10.4 Summary of the Energy St
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County Population Area (km 2 ) Foss
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ACRONYMS AND GLOSSARY OF TERMS1. AC
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RD&DREAREPRMSSMRsSAPPToEVATWpResear
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Reticulation means the network used
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National Energy Policy - Final Draft - 14 Nov 2013

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