Eng. Albert Mugo ,CEO KenGen
By Booker Ngesa and Kevin Achola
Having triumphed in a competitive recruitment process, in January of 2014, Eng. Albert Mugo is now the CEO of Kenya Electricity Generating Company (KenGen). In 2008, Eng. Mugo joined KenGen as the business development and strategy director with the mandate to develop strategy for expansion. As such, he was involved in the development of business plans and implementing them particularly for the expansion of the power system.
He took part in the implementation of the 120 MW Kipevu 3 Power Project, which was implemented in a record fourteen months. Another project of note is the 280 MW Olkaria 4 Power Plant, the construction of which started in 2012 while Eng. Mugo was serving as the business development and strategy director. KenGen has already connected three of Olkaria 4 Power Plant’s four units to the national grid with the fourth unit to be connected in November 2014.
Eng. Mugo is an electrical engineer who earned a Bachelor of Science degree in electrical Engineering from the University of Nairobi in 1980. Kenya Pipeline Company recruited him from the University of Nairobi. There, he worked for a short while, one and half years, before moving to East African Power and Lighting Company (EAPLC).
At the East Africa Power and lighting Company, he worked as a graduate trainee engineer and thereafter the company absorbed him as a protection Engineer, giving him the opportunity to work on power stations and distribution lines. At an early stage in his career, EAPLC posted him to the Seven Folk’s Scheme, the main dams from which Kenya gets its hydro electricity. He later rejoined the main office in Nairobi and continued doing the protection work he had started. With time, he moved to the planning department of the company that had then become the Kenya Power and Lighting Company (KPLC).
When Eng. Mugo joined planning at KPLC, he was involved in planning for generation, transmission, and distribution expansion. He also had the opportunity to work with international financial agencies like the World Bank. He then got involved in implementing works like the transmission lines from Rabai to Kipevu. He also took part in preparing projects like the Olkaria 2 project. Besides Kenya, Eng. Mugo has also contributed to regional planning of projects in East Africa and with the Nile Basin Initiative, which comprises nine countries that share the Nile. In 2008, he left KPLC, at that time he was the power systems development manager, for KenGen.
KenGen must be very busy with plans to meet the governments’ quest for 5000 MW by 2017. As the major power generator, what are the projects that KenGen has in place to achieve this ambitious goal and to stabilize the power generation in the country?
We have always depended on hydropower generation to power the country. Hydro used to generate up to 80% of the power consumed in Kenya. Looking at the weather patterns in the country, you discover you have a problem when you are dependent on hydro. What KenGen is doing is to move toward other more secure sources of power to balance the generation mix especially geothermal. The first geothermal plant we installed was in 1981, a small unit of 15 MW. Currently, we install units of 70 MW. Hydro contributes about 60% of the power mix as we speak yet in two to three years we see geothermal move to 50% with hydro moving to 30%, wind and the rest take the other 20%.
What role, if any, will thermal plants play in the forecast that you have just shared? I do not see the significance of thermal plants. As geothermal gains significance, will we cease to use thermal plants? With the power purchase agreements already in place with specific firms, how will these agreements play out?
To supplement hydro during bad weather, we have put up thermal plants. It is true, as you observe that geothermal plants are actively replacing them. These thermal plants will still give us security of supply when hydro generation is not doing very well. They will also act as back up supply. We also expect cheaper thermal plants to come up such as coal power plants that are a lot cheaper than diesel. With respect to the coal plant that the government currently has in mind, they will start with importing coal. As you know, the government just gave a concession for the coal in Mui Basin. It will take a bit of time before we can use this coal at commercial levels. KenGen is actually considering developing a coal power plant close to the source of coal in Mwingi or the Mui Basin itself. These locations are not far from Nairobi where we have the greatest demand for power.
Concerning diversification and extending into new fields of business, does KenGen consider other businesses like engineering consultancy besides being a power generator?
That is a great question Kevin. In fact, we are already doing some consultancy work. Because we have gained a lot of experience with KenGen’s producing geothermal power since 1981, we have been doing consultancy for geothermal power production for different countries and companies. Around 2007, we were doing consultancy work for Comoros. In 2011-2012, we did some work in Rwanda. We have also done some work in Sudan and, actually, still have a contract with them.
Tanzania and Zambia have also approached us. Whenever people visit Olkaria and see the kind of work we do, they get excited. When they realize their geothermal potential, they invite us to contribute our expertise.
We also have a central workshop where we do rewinding of motors, transformers, and generators. In that workshop, we . . .do a lot of work for private companies. We are also diversifying to other areas like providing the land we have in Olkaria for industries to put up industrial parks. We can then provide them with steam and even electricity when the industry is fully liberalized. We have even set up a geothermal spa, a recreational facility using the natural water from the ground.
KenGen has initiated great and bold moves… The government has also initiated several changes that affect KenGen. Let us talk abound unbundling and the impacts it has had in the industry.
Before 1997, before unbundling, only Kenya Power and Lighting Company was known. You can say unbundling has made the sector strong because of the bodies that it created with specific mandates. For example, KenGen is to concentrate only in generating power. Other companies created with specific mandates include the Rural Electrification Authority, Geothermal Development Company and Kenya Electricity Transmission Company. The many companies created should make the industry more efficient, and I think, it has helped the growth of the sector.
With respect to the fast changing power landscape and the generation mix in Kenya, there is increased private sector participation in the power sector. The role of KenGen and its generation percentage is shrinking. KenGen and the government may soon be minor players in the power sector. How is this affecting KenGen? Are these changes good for Kenya?
It is a fact that power generation is a very capital-intensive venture. As such, KenGen, a single company, is not able to meet all the power demands of the county. The private sector comes in to fill the gap that would exist because KenGen does not have all the resources required. They supplement what KenGen is doing. We are not scared of the private sector.
Just to cut in. A power sector that is private sector controlled, is that good for the country?
Probably not, even in the most developed countries there is still a portion of the power sector held by the government. It would not be wise to privatise entirely the power sector. I hope the government will continue to support KenGen to be the stabilising factor in terms of providing power in time and with competitive tariffs for Kenyans.
The government has embarked on a plan to generate 5000 MW by 2017. From the projections KenGen has, does Kenya have the capacity to absorb this power?
Generating 5000 MW by 2017 is a good project. People have said it is very ambitious. The government has, however, indicated that it has areas where demand can be grown to absorb this power. We are looking at iron ore smelting, transportation like the standard gauge railways, agriculture, mining, tourism, and information technology sector. At the Ministry of Energy and Petroleum, a committee for demand creation comprising various stakeholders in the power sector exists. We are interacting with various players who will consume the power. Power plants take time to develop. We will track the demand and slow down production of power that we cannot absorb.
As of now, and considering the time it takes to develop this 5000 MW capacity, it is a good vision by the government.
How do the fossil fuel resources we are about to start enjoying affect power generation and the power mix in the country?
We currently use fossil fuels for thermal plants. but they are very expensive. If we get our own fossil fuels, we expect the government to give subsidies, hence, making the electricity generated from them affordable. The energy mix could actually change with the thermal plants increasing in significance. We were excited when we heard that there could be liquefied natural gas in North Eastern Kenya. We have even expressed interest to set up a generation plant there.
As an Engineer, how does it feel to be at the helm of a corporation like KenGen? Does your engineering background help? Does KenGen have enough engineers?
Having worked in the power sector both at the generation and at the distribution level, I enjoy an advantage at KenGen. I can interact and understand better the teams I work with. KenGen is an Engineering firm with generating power as its business. With the background and experience I have, I can interact with the Engineers and understand them better. With experience in planning, I find it easier to source for funding, examine projects and present proposals to the board of the company.
Developing an Engineer takes time and expense. We do experience problems sometimes in getting specific skills like contract administration and project management for the projects we have. We, however, have initiatives like overseas training and pairing of seasoned and young engineers to transfer skills.
If you had the chance, what would you change about the power sector?
The sector could do with a lot of support from the government in terms of mitigating risks. I would lobby and dialogue with the government to reduce risks associated with setting up power plants. I would also encourage the government to set up a more secure business environment. This would even reduce the price of power by eliminating the risk premium by investors. I would also work with the government and the National Land Commission to solve the issues around way leafs. Easement issues limit the distribution and reach of power.
How does an engineer get to the summit of achievement as you have?
As they say, Rome was not build in a day. It has taken almost thirty-four years to be where I am. I would appeal to engineers to be faithful and diligent in their work. Follow the older engineers in their instruction and learn your trade well. Do not forget personal development. At some point, I even had to take a masters degree in management to improve my outlook. The engineering degree gives you the power to do much more than just engineering. The moment you realize that the engineering degree is just an empowerment, there is no limit to your achievement.