Fuel Companies Face Crisis as Country Shifts to Clean Energy

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Traffic snarl-up at Uhuru Highway in Nairobi in March 2020.
Kenyans.co.ke

Oil companies are grappling with the government’s plan to shift to clean energy by retiring or converting fossil fuels by 2030. 

Kenya is ranked 5th globally in the Bloomberg Investment index and by 2018, the country had invested over Ksh140 billion in clean energy sources. 

Companies are shifting to solar energy, solar power panels for industrial use and wind-powered machines thus replacing geothermal power engines that use gas, oil, and heavy fuel oils which pollute the environment. 

One of the leading firms, TotalEnergies, rebranded from Total Petroleum, expanding its energy market from the production of oil and gas to only renewable energies - wind, solar, green hydrogen and others. 

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President Uhuru Kenyatta launches Garissa Power Plant in Garissa County on Friday, December 13, 2019
PSCU

Government-owned energy company KenGen, is also conducting a feasibility study on converting the thermal power plants that contribute seven percent of electricity. 

However, in as much as the energy transition offers companies opportunities to reduce costs and expand their businesses in the clean energy sector market that is sprouting, many companies face a crisis owing to certain roadblocks. 

One of the barriers to energy transition is the lack of clear government regulatory systems and policies.

“While gradually moving energy systems away from fossil fuel is crucial, a combined increased investment in and deployment of renewable energy and reformed energy policies crucial for sector’s growth and economic development with the right policies are critical to achieving a low-carbon future. 

“A reformed policy environment that balances economic development and growth, energy security and access, and most importantly, environmental sustainability is fundamental,” stated Chief Executive Officer, Anthony Munyasya, Galana Oil Limited.

Galana Oil is converting its systems to accommodate solar panels expected to generate solar energy for running its equipment nationally.  

In November 2020, the Energy Petroleum and Regulatory Authority  (EPRA) sparked outrage with its draft recommendations on solar energy installation. 

The (Solar Photovoltaic Systems) Regulations 2020, proposed charging solar technicians and contractors between Ksh2,250 and Ksh6,000 to obtain and renew licenses, between Ksh1 million and Ksh10 million for insurance policies and Ksh5,000 per day for practising with expired licences.

In light of the aforementioned proposals, Munyasya argued that energy transition in Kenya is capital intensive and companies operate in an environment where unstable power is likely to damage equipment due to power fluctuations. 

“Nonetheless, solar energy ensures business continuity and guarantees reduced carbon emissions. Therefore, the Kenyan government should review the regulatory frameworks on energy production and distribution, as well as provide incentives to attract more players into green energy power production,” he advised.  

File image of a petrol station
An undated image of a petrol station in Nairobi.
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