PROJECT DEVELOPMENT FACILITY
CONCEPT FOR PIPELINE ENTRY
AGENCY’S PROJECT ID:
GEFSEC PROJECT ID: 2683
COUNTRIES: Burundi, Kenya, Malawi,
Mozambique, Rwanda, Tanzania, Uganda, Zambia,
Zimbabwe
PROJECT TITLE: Greening the Tea Industry in East
Africa
GEF AGENCY:
OTHER EXECUTING AGENCY: EATTA
( East African Tea Trade Association)
DURATION: 4 years
GEF FOCAL AREA: Climate Change
GEF OPERATIONAL PROGRAM:
OP6: Promoting the Adoption of Renewable
Energy by removing barriers and reducing
implementation costs.
GEF STRATEGIC PRIORITY:
SP-3: Power Sector Policy Framework Supporting
of Renewable Energy and Energy Efficiency with
relevance to SP-1: Transformation of Markets for
High Value Products and Processes.
ESTIMATED STARTING DATE: PDF-B June 2005;
Full Size Project March 2007
ESTIMATED WP ENTRY DATE: OCTOBER 2006
PIPELINE ENTRY DATE: MARCH 2005
1
FINANCING PLAN (US$)
GEF ALLOCATION
2.470
Project (estimated)
Project Co-financing
(estimated)
13.320
11.350
PDF A*
PDF B**
600,160
PDF C
Sub-Total GEF PDF
600,160
PDF CO-FINANCING (details provided
in Part II, Section E – Budget)
GEF Agency
National Contribution
Others
258,000
Sub-Total PDF Co258,000
financing:
Total PDF Project
858,160
Financing:
* Indicate approval date of PDFA
** If supplemental, indicate amount and date
of originally approved PDF
RECORD OF ENDORSEMENT ON BEHALF OF THE GOVERNMENT: (EATTA is in the process of
Securing GEF Focal Points Endorsements)
Etienne Kayengayene
Date: (Month, day, year)
Directeur General of Environment and Land Management
Ministry of Land Management, Environment and Tourism
B.P. 631
Bujumbura, Burundi
TEL: 257 21 3257 / 24 1203
FAX: 257 24 1205 / 22 8902
Ratemo W. Micheka
Director General
National Environment Management Authority
PO Box 67839
Nairobi
Kenya
TEL: 254 2 609013
FAX : 254 2 608997
E-mail: [email protected]
Raphael Kabwaza
Director of Environmental Affairs
Ministry of Natural Resources and Environmental Affairs
Lingadzi House
Private Bag 394
Lilongwe 3, Malawi
TEL: (265) 781 111
FAX : (265) 783 379
E-mail: [email protected]
Francisco Mabjaia
Vice-Minister
Ministry for Coordination of Environmental Affairs (MICOA)
Rua de Kassuende, 167
C.P. 2020 Maputo
Mozambique
TEL: (258-1) 495409 / 485265
FAX: (258-1) 496108 / 485264
Laurent Nkusi
Ministre des Terres, de la reinstallation ed de l'Environnement
BP 3502
Kigali
Rwanda
TEL: 250 82628
FAX: 250 82629
E-mail: [email protected]
Raphael Mollel
Senior Permanent Secretary
Vice President's Office
P.O. Box 5380
Dar es Salaam
Tanzania
PHONE: (255-22) 2116995
FAX : (255-22) 2113856
Email: [email protected]
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Mary Muduuli
Deputy Secretary to the Treasury
Ministry of Finance, Planning and Economic
Development
Finance Headquarters Building
Plot 2-12 Appollo Kaggwa Road
PO Box 8147
Kampala
Uganda
TEL: 256 41 234433
FAX : 256 41 250005
E-mail: [email protected]
L.E. Kapulu
Acting Permanent Secretary
Ministry of Tourism, Environment and Natural
Resources
Kwacha House
Cairo Road
PO Box 34011
Lusaka, Zambia
TEL: 260 1 229416
FAX : 260 1 229420
Margaret Sangarawe
Ministry of Environment and Tourism
15th Floor, Karigamombe Centre
53 Samora Machel Avenue
P. Bag 7753 - CAUSEWAY; Harare
Zimbabwe
TEL: 263 4 757881
This proposal has been prepared in accordance with GEF policies and procedures and meets the
standards of the GEF Project Review Criteria for pipeline approval.
Ahmed Djoghlaf
Assistant Executive Director
UNEP/DGEF
Fax: 254 20 4165
Date: March 9, 2005
Peerke De Bakker
Programme Officer
UNEP – DGEF
Tel: ++254-20-623967
Email: [email protected]
3
Acronyms and Abbreviations:
ADEME
AFREPREN
AREED
CC
CDCF
EATTA
ERB
ERT
ESCO
EUEI
GEF
GEF-KAM
GHG
GWh
GTZ
IBRD
IPP
KPLC
KTDA
kW
MHP
UNFCC
UNEP
MOU
MW
MWH
NEPAD
O.P
PMO
PV
REEEP
SADC
SC
STAP
TANESCO
UNDP
UNIDO
ZESCO
French Agency for Energy and Environment
African Energy Policy Research Network
African Renewable Energy Enterprise Development
Climate Change
Community Development Carbon Fund
East African Tea Trade Association
Energy Regulatory Board
Energy for Rural Transformation
Energy Service Company
European Union Energy Initiative for Poverty Reduction and
Sustainable Development
Global Environment Facility
Global Environment Facility – Kenya Association of
Manufacturers
Greenhouse Gas
Giga Watt Hour
German Agency for Technical Cooperation
International Bank for Reconstruction and Development
Independent Power Producers
Kenya Power & Lighting Company
Kenya Tea Development Authority
Kilo Watt
Mini Hydro Project
United Nations Framework Convention on Climate Change
United Nations Environment Programme
Memorandum Of Understanding
Mega Watt
Mega Watt Hour
New Partnership for Africa’s New Development
Operational Programme
Project Management Office
Photovoltaics
Renewable Energy and Energy Efficiency Partnership
South African Development Community
Steering Committee
Scientific &Technical Advisory Pannel
Tanzania Electrical Servic4e Company
United Nations Development Programme
United Nations Industry development Organisation
Zambia Electric Service Company
4
PART 1 – PROJECT CONCEPT
A – SUMMARY
Many Eastern and Southern African countries (Ethiopia, Burundi, Kenya, Malawi,
Mozambique, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe) produce tea in bulk for
export, generating crucial foreign earnings. Foreign earnings are the ultimate productive use of
energy allowing tea communities to become economically strong. The basic processing of
tealeaves undertaken at the tea factories requires significant amounts of electrical energy.
Currently, in most factories the electrical energy is sourced from, often unreliable, national
grids or inefficient and highly polluting and greenhouse gas emitting diesel gensets. Since the
tea areas are often remote areas and voltage on the grid may drop causing damage to
equipment and preventing the use of some voltage sensitive equipment like compact
fluorescent lights. Drought prone countries including most of these have had drought induced
power rationing in recent years. Most of these countries have inefficient transmission and
distribution systems, high demand and low generation capacities resulting in frequent load
shedding. All tea factories have generator sets that are on average in operation for up to 5 % of
(factory operation) time. The fuel budgets of tea factories are dependent on increasing
international oil prices with negative implications on the competitiveness of the tea produce at
the world market.
It appears that whenever tea is grown, the rainfall and hilly terrain guarantee that there will be
a hydro potential somewhere near the tea processing plant. In some cases this potential is
already used, but in most cases the tea manufacturers rely on the grid and some diesel gen-sets
for back up purposes. Since few tea factories have taken up small hydro, a project is proposed
to systematically remove barriers regionally (see discussion on barriers in subsequent section).
The umbrella organization engaging in the entire Tea Sector in all countries mentioned is the
East African Tea Trade Association (EATTA). EATTA is the proponent of the proposal, as
well as the initiator and facilitator of the project. Through its network, it shall be instrumental
in liaison with national tea agencies and individual tea factories, support overall data
collection, and provide support to consultative workshops and training sessions in various
countries.
Through a number of (pre) feasibility studies, some six pilot mini-hydro projects are to be
developed, preferably with a rural community electrification component piggy-backed to the
mini-hydro project development. All stages of such a project development (pre-feasibility,
feasibility including detailed design, tendering, actual construction and commissioning,
operation and maintenance) will form a solid training ground for tea sector engineers as well as
civil engineers from national consulting/engineering firms. Hands-on training should build
sufficient technical capacity that will enable the realization of future mini-hydro systems
tapping local expertise. Socioeconomic impacts and environmental assessments would be
included at feasibility and completion stages.
5
In addition the project aims to accelerate the shift from grid and diesel gensets to hydro
through the creation of special financing window for tea manufacturers with conducive terms
and conditions offered to all EATTA member countries, in order to provide a long lasting
incentive for such a shift.
This initiative aims to improve both energy supply security and lower tea production costs by
reducing dependency on fossil fuels, consumed by generator sets, and shifting from grid power
to hydropower generated in close proximity to the tea factories. The project will have the
global environmental benefit of reducing Greenhouse Gas (GHG) emissions and contribute to
poverty alleviation through employment and local productive uses. The specific objectives are
to: facilitate generation of electricity from decentralized hydropower; improve the reliability
and quality of energy service to the tea factories and hence lower factory production costs;
while providing access of electricity to households and public and community facilities within
close proximity to the tea factories. The benefit to the utilities will be grid reinforcement and
reduce any fossil fuel generated electricity in the main grid. The concept is to blend a
commercial activity (tea processing) and its energy requirements with the social and
developmental dimension of rural electrification in a sustainable manner.
B – COUNTRY OWNERSHIP
1.
COUNTRY ELIGIBILITY
As per requisite all of the participating countries (EATTA members) have to be a signatory to
the United Nations Framework Convention on Climate Change (UNFCCC). All countries
considered have signed and ratified the convention. A summary is provided in Table 01.
Table 01: UNFCCC Ratifications
Country
Date Of Signature
Ethiopia
10 June 1992
Kenya
12 June 1992
Tanzania
12 June 1992
Uganda
13 June 1992
Malawi
10 June 1992
Zimbabwe
12 June 1992
Rwanda
10 June 1992
Zambia
11 June 1992
Mozambique
12 June 1992
Burundi
11 June 1992
2.
Date Of Ratification
05 April 1994
30/August 1994
17 April 1996
08 September 1993
21 April 1994
03 November 1992
18 August 1995
28 May 1993
25 August 1995
06 January 1997
COUNTRY DRIVEN-NESS
During the conceptual stage of project formulation, a discussion was held between UNEP and
the Board of the EATTA (see Appendix C – mission report and Appendix D – minutes
EATTA Board). The Board expressed keen interest and decided to support and facilitate data
collection during the stage of project formulation.
Over the last 10 years, structural power sector reforms were implemented in the region.
Independent power producers are now able to officially generate power (see Table 02).
However, it appears that in general the tariffs offered for electric power by third parties does
6
not provide much of an incentive. A more conducive climate for power development starts
with a tariff structure.
Today, tariff related issues form an obstacle for Independent Power Producers (IPP) to supply
(excess) electric power to the grid. Rates for the transfer of electric power, acceptable to both
the utility and the (third party) power generator are a pre-requisite for future development of
IPPs. An alternative would be that individual companies (tea factories or IPPs) in cooperation
with local community organisations both generate and distribute power to nearby residents and
communities. This last approach would entail concession licensing, different tariffication and
revenue collection by the IPP.
Table 02: Status of Power Sector Reform
Status of Power Reform Sector
Reform
New/Amended
Policy
Electricity Act
Ethiopia
Implemented Implemented
Kenya
Implemented Implemented
Malawi
Implemented Implemented
Mozambique Implemented Implemented
Tanzania
Implemented Pending
Uganda
Implemented Implemented
Zambia
Implemented Implemented
Zimbabwe
Implemented Pending
Burundi
No
No
Rwanda
Implemented Pending
Regulation
Agency
Implemented
Implemented
Implemented
Pending
Pending
Implemented
Implemented
Pending
No
Implemented
Licenses
Issued
No
Implemented
Implemented
Pending
Implemented
Pending
Implemented
Pending
No
Pending
Access to
Grid Granted
No
Implemented
Implemented
Implemented
No
Pending
Implemented
Pending
No
Pending
Private Sector
Participation
Pending
Implemented
Pending
Pending
Implemented
Implemented
Implemented
Pending
No
Pending
Energy policies in all EATTA member states were reviewed for their commitment to the
development of mini hydro and private sector involvement:
Ethiopia:
Energy Policy of the Transitional Government of Ethiopia (2004) states the following
paragraphs in support of the development of small hydro projects:
4.7.1 To ensure the compatibility of energy resources developed and utilization with
ecological and environmentally sound policies.
4.10. To create conducive environment for the participation of the private sector in the
development of energy sources.
5.0 Priority of the Policy:
5.1
High priority of hydro-power resource development as hydrological resources are one
of Ethiopia’s most abundant and energy forms.
5.3.1 To pay due and close attention to ecological and environmental issues during the
development of energy projects.
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Burundi:
In the national communication for UNFCCC, Burundi states it has decided to take 3 potential
options to reduce GHG:
1) Increase access rate to modern energy such as hydro electricity and renewable energy;
2) Supply of energy of sufficient quality and quantity for industry and cottage industry
while improving the supply security for both electricity and petrol products;
3) Meeting domestic requirements while safeguarding the environment.
To attain these objectives, the government will rehabilitate and extend the existing electricity
network, plan hydropower plants and promote technologies that save wood fuel as well as
promote renewable energy. The biggest constraint is the lack of finance for the sector’s
program. The government will adopt measures to reduce the cost of certain equipment to
provide greater access to industries and households.
Furthermore the national communications talk about increasing energy efficiency in the
manufacturing industry and energy efficiency (thermal power) in breweries and tea processing
plants in order to reduce consumption of fossil fuel and biomass.
For decentralized electrification of public infrastructure both solar PV and small (“pico”)
hydropower plants are envisioned, as this will contribute to a reduction in GHG emissions.
Kenya:
The Draft National Energy Policy of 2004 is clear on encouraging mini hydro and private
sector involvement:
6.4 Rural Energy: The government will encourage and promote private sector initiatives in
entering the renewable energy market. The government recognizes the side of development
partners in finding specific programs and will continue to seek their support especially in
areas less attractive to the private sector. Furthermore the government will allocate resources
to complement self-help groups and private sector efforts in rural energy supplies.
6.5.2 Fiscal policies: The government in recognition of the need to lower the electricity tariffs
will grant a 15 year income tax holiday for hydroelectric projects whose installed capacity will
not be less than 50 MW; 10 years for projects between 20 MW and 7 years for those below 20
MW but not less than 1 MW. (Note: the project obvious has a task in the formulation of
incentives for small-scale power generation, or lumping together a number of mini hydro in
one project). For the rest 6.5.2 specifies the duty and tax-free procurement of plant, equipment
and related accessories for generation and transmission; exempt public electricity supplies from
income tax (up to a certain extent). Tax holiday system is to be reviewed in a new Energy
Policy.
6.7 Legal and Regulatory framework: Specifies ERB to license electric power producers with
ERB as a one stop office for facilitating permits and licenses; enabling renewable energy
systems and not exceeding 3 MW to operate in any area without license irrespective of any
other existing distribution license. The National Energy Policy would make it mandatory for a
licensed public electricity supplier operating in an area where power generation is being
undertaken by parties other than those with agreements or arrangements with such public
8
electricity suppliers to buy such power on terms approved by ERB (note: obviously the project
will have a role to play in discussions with ERB).
Note (March 2005): The newly published Sessional Paper on Energy spells and Kenya’s new
energy policies: Whereas before the limit was set at 1mw (and obligatory hybrid-a reflection of
a national lack of confidence is renewable energy technologies), the new threshold is set as a
ceiling of 3MW and below (and not hybrid) for power generation that has no large needs to be
licensed by the Ministry of Energy. Provided tariffs are approved by the Energy Regulatory
Board, Large power producers can now access customers directly. For hydro projects clearing
from the water authority and environmental Management Agency (Environmental Impact
assessment and regular audits) remain compulsory. Environmental safety Standards for
transmission are under preparation wheres before it was required to follow KPLC prudent
practices, now a new grid code allows for independent mini grids.
6.14.2 Other Renewables: The government recognizes that most of the renewable energy
sources; solar, wind, small hydros, co-generation, biogas and municipal waste energy have
potential for the creation of opportunities and employment generation. In order to encourage
private sector participation in harnessing these sources of energy the government will
therefore pursue the following policy strategies:
 Collection of hydrological data and undertaking of pre-feasibility and feasibility studies
on small hydro;
 Packaging and dissemination of information on renewable energy systems to create
investor and consumer awareness and community based pilot projects;
 Review of Electric Power Act 1997 to facilitate rural electrification base don supply on a
limited scale using renewable energy technologies;
 Allowing duty free importation of renewable energy hardware as to promote widespread
usage;
 Provision of tax incentive to both users and producers of renewable energy technologies
and related accessories based on the degree of maturity and market presentation;
 Encouraging financial institutions to provide credit facilities for up to a maximum period
of 7 years to consumers and entrepreneurs through fiscal incentives;
 Enforcing protection of the catchment areas.
Malawi:
The White Paper on Energy Policy for Malawi – 2001 mentions the following:
2.2.2 Specific Policy Goals:
 Create an enabling environment for investment, private enterprise, competition and
operational efficiency with minimum adverse effects on wealth and environment;
 Promote wide spread efficient use of suitable at affordable new and renewable energy
among rural, per-urban and urban population.
Being aware that past rural electrification efforts were inadequate, the government now is
(3.1.6) “ committed to providing and supporting rural electrification as a means of poverty
reduction and will intensify public sector investment to accelerate electrification activities in
rural and peri-urban areas,” while “ensuring the establishment of a dedicated funding
mechanism and establishing an appropriate regulatory and legal framework to support
arrangements for rural electrification.”
9
In 3.3.4. the Government of Malawi pledged to “increase access to and efficient use of
sustainable new and renewable energy among the Malawi population,” and make sure that
(3.4.1) “ duties and taxes on renewable are not re-introduced”. In addition the government
will “ensure appropriate financing mechanisms and credit schemes using existing financial
institutions.”
Mozambique:
The Renewable Energy sub-sector in Mozambique is rather new. The overall energy policy
strategy aims to create “a proper viable climate in order to attract all stakeholders and key
players that could promote the renewable sub-sector”. There exists some ideas to start work
in mini and micro hydro but there is a general lack of information on such systems and the
related costs. Source: Transcript of presentation of Regional REEEP meeting, Southern Africa
July 20-22, 2003, Johannesberg.
Rwanda:
The Enhanced Structural Adjustment Facility Policy Framework makes mention of Rwanda’s
priorities in the energy sector:
The objective of the government in the energy sector are to expand and diversify energy
supplies at competitive costs, promote the efficient utilization of Rwanda’s energy resources,
and minimize the potential adverse environmental impacts. The immediate priorities in the
energy sector are to (i) rehabilitate key power facilities; (ii) restructure and privatize the part
of ELECTROGAZ that supplies and distributes electricity and gas so as to improve its
operational efficiency; (iii) build capacity for policy development and investment planning in
key sub-sectors such as gas, hydropower, petroleum products, rural electrification, and (iv)
promote the regeneration of forest resources damaged during the emergencies in the country.
The government is preparing a strategic and regulatory framework to address both urban and
rural energy needs and to encourage private sector energy provision and distribution. This
strategy will emphasize the efficient use of sustainable energy sources based on natural
resources.
Tanzania:
Tanzania recently revised the national energy policy to accommodate power sector reforms,
promote renewables and advance rural electrification. Under the power sector-restructuring
program, independent power producers can generate power and sell to TANESCO. An
important strategic objective in the national policy is to reduce fossil fuel dependency through
increased use of renewables and improving energy efficiency. Some renewable energy and
rural electrification projects have been implemented with assistance from various agencies.
However most of the past efforts have been targeted at households and not at the rural
industrial sector.
The National Energy Policy, 2003: The government of Tanzania is aware that renewable
energy resources so far have remained under utilized (1.1.2. Energy situation) while
“electricity needs to be made available for economic activities in rural areas, rural townships
and commercial centers. Rural electrification is therefore a case of long-term national interest
and a pre-requisite for a balanced social economic growth for all in Tanzania”.
10
Policy Statement 35: Introduce appropriate rural energy development, financial, legal, and
administrative institutions.
Policy Statement 36: Establish norms, codes of practice, guidelines and standards for
renewable energy technologies, to facilitate the creation of an enabling environment for
sustainable development of renewable energy sources.
Policy Statement 38: Ensure inclusion of environmental considerations in all renewable energy
planning and implementation and enhance co-generation with other relevant stakeholders.
Policy Statement 39: Support research and development of renewable energy technologies.
Policy Statement 43: Support research and development of rural energy
Policy Statement 45: Promote entrepreneurship and private initiatives in the production and
marketing of products and services for rural and renewable energy
Policy Statement 46: Ensure continued electrification of rural economic centers and make
electricity accessible and affordable to low income customers.
Policy statement 47: Facilitate increased availability of energy services including grid and
non- grid electrification to rural areas.
Uganda:
The Energy Policy for Uganda (2002) states that:
Realizing (in 1.2.4) that the Uganda is endowed with a variety of renewable energy sources
that include hydrological resources “ with only a meager fraction of the country’s renewable
energy potential being exploited, Uganda aims to develop the use of renewable energy
resources for both single and large scale applications”.
In 4.2.3: The Government has spelled out a number of strategies ranging from dissemination
of technologies, including renewables in school curriculum, setting of standards, facilitating
financing schemes, etc.
Zambia:
The National Energy Policy of 1994 of Zambia mentions:
1.3.5 Mini hydro is identified as one of the renewable energy resources that is greatly under
utilized.
2.6 New and renewable sources of energy:
2.6.1 Promote NRSE technological development
2.6.2 Promote wider application of NRSE technologies
2.6.3 Promote information dissemination
2.6.4 Promote education and training
Zimbabwe:
AFREPREN Occasional Paper 20: Zimbabwe’s Policy on Energy Services for the Urban Poor
– Proceedings of a National Policy Workshop: There is a “Renewable” Sector in the
Department of Energy that is to facilitate renewable energy policies, strategies and action
plans, promote renewable energy technologies, coordinate actions, disseminate projects. The
draft energy policy has tried to address that the “economically viable new and renewable
sources of energy technologies are to be encouraged and promoted. Support (initiation,
coordination and monitoring) is given to research efforts in order to establish the viability of
NRSE technologies. The strategy regarding NRSE is to identify appropriate alternative energy
technologies and sources and to promote the commercialization of viable technologies”. The
11
policy also highlights the removal of import duties and other taxes to reduce investment cost of
NRSE technologies.
C – PROGRAM AND POLICY CONFORMITY
1. PROGRAM DESIGNATION AND CONFORMITY
Hydro projects in general support the global environmental objective of reduction of GHG
emissions by replacing current or planned thermal power generation.
Operational Program O.P.6: “Promoting the Adoption of Renewable Energy by Removing
Barriers and Reducing Implementation Costs”.
The central activity is the promotion of mini hydro to meet electric power needs of the energyhungry tea processing plants.
However, it is inconceivable to use the current and actual power consumption of a tea factory
as a given fact in the subsequent dimensioning of a (renewable) power supply system: that will
have to start with a proper energy audit determining what potential there is for energy saving
(equipment and staggering of production processes). Only after that a proper power supply
design can be made. Therefore, also O.P. 5 “Removing barriers to energy conservation and
energy efficiency” is directly relevant to the proposed project.
Strategic Priorities:
Promoting the research to invest in mini hyro to meet its captive power needs, and promoting
the use of excess hydro potential for rural electrification are classified under SP-3: “Power
Sector Policy Framework Supportive of Renewable Energy and Energy Efficiency”
In addition, introducing mini-hydro to sustain the power requirements of tea processing plants
is conform SP 1:
“The Transformation of Markets for High Volume Products”.
The proposed utilization of hydropower in every particular project would directly lead to
income generation with the tea factories productively using the renewable energy sources (SP 4
–“productive uses of renewable energy”).
2. PROJECT DESIGN
2 A) Background and Context
Fresh tealeaves are processed in tea processing plants. This process requires substantial
amounts of both electric power (for lighting, cutting, transport, sieving, etc.) and thermal
power (for drying). Tea factories in the entire region have persistently faced problems with the
supply reliability as well as the cost of electric power while the fluctuating cost of fossil fuel
oil for back-up generator sets and boilers/furnaces may spell the difference between a year of
profit or loss. For African tea to remain competitive on the world market, cost cutting in the
production and processing is necessary. From the perspective of the Global Environment
Facility the interest in addressing the concern of the tea sector basically has an environmental
dimension: The processing of the tealeaves requires enormous amounts of both electrical and
12
thermal power. Thermal power, in large amounts is needed in the ovens. The sea fermentation
process is stopped instantly by injecting the relatively humid curled tea leaves in a high
temperature oven where it is flash dried. This process required large bailers. To a large extent
power for tea processing is sourced from (imported) fossil fuels (diesel, furnace oil) or the grid
while in many cases alternative (renewable and therefore less polluting) sources can be found
nearby. Small hydro-power (in terms of both price and performance) will be competitive with
more conventional power supply options. Typically the tea factory might enjoy a low bulk
tariff, and suffer early disconnection in case of grid weakness. Diesel backup electricity could
easily be triple the cost of small hydro with relatively low capital cost but high fuel cost
(including transport). A more rational generation of power with overall lowest cost would be
local small hydro production to reinforce the main grid and eliminate the diesel consumption.
Since the small hydro cannot “save” the main grid, control systems should be installed to
isolate the minigrid in case of main grid failure. Using renewable energy sources in meeting
the energy requirements of tea plants may be a new and attractive selling point to Western
markets giving an entire new meaning to the word “green” tea.
However a number of obstacles obstructing the massive introduction of these environmentally
friendly options do exist:
 Financial Weakness: The recent surge of world energy prices certainly must provide extra
motivation to shift away from fossil fuel but at the very instant such sudden high prices
only weaken the overall performance of every tea factory. To date no financial incentives
are available that would make the choice for a future power supply any easier;
 Captive Power Generation Awareness: To date most factories rely for the bulk of their
electric power requirements on the (national) utility. Expensive generator sets are
commonly used for back-up services only. The concept of generating your own base load
is generally relatively new in the region. In addition and varying per country, there may
exist legal obstacles to captive power generation (especially when actual generation occurs
outside the tea factory, utilizing national /natural resources such as water in rivers:
 Lack of Technical Capacity: Technical expertise in the development of small-scale (mini)
hydro projects is short throughout the region. Support is needed in the entire process of a
proper feasibility study that (has to) include topographic and soil surveys as well as a
detailed engineering design and costing. Although some achievements of the metal sector
of the region should not be ignored, actual manufacturing capability for mini hydro
equipment (ranging from 100-1000 kW) are non-existent. The proposed project aims to
address all the aforementioned obstacles through the creation of a special financing
window, provide technical assistance to actual projects while building technical capacities
hands-on, promote and facilitate captive power generation (and local distribution, if
feasible) and disseminate experiences with small scale hydro in the region and beyond.
The proposed project would promote clear prospects for the development of a local
manufacturing industry for a number of electro mechanical system components in the mini
hydro sector. Such local manufacturing capabilities would facilitate the development of
additional (e.g. community-based) decentralized power generation projects in the region.
 Policy Framework issues: The sale of relatively small quantities of bulk power or the
option of creating a ESCO that generates and sells power to tea factories and local
communities; tea factories distributing electric power to nearby communities; securing
water rights that will prevent water extraction upstream (e.g. for irrigation purposes) are all
issues that need to be addressed prior and during actual project implementation.
13
Hydro Electric Power
The correlation between tea plantations and hydro potential (in Africa) has been briefly
explored during the period of writing the concept. Simply because of availability of data, the
situation in Kenya was analyzed. Rainfall data were superimposed on a map of the Kenya tea
plantations. Clearly tea is grown in those areas with the highest yearly precipitation. In
Central Kenya, this rainfall is caused by orographic lifting caused by coastal air being forced to
higher altitudes by Mount Kenya and the Aberdares Range. Tea is grown in areas with modest
temperatures; both heat and cold (frost) would prohibit tea growing. Both flat (low) areas and
high altitudes have temperature extremes. In addition, the presence of water (water has a
relatively high heat capacity) has a strong moderating effect on local temperatures. In short,
the hilly and mountainous areas of Kenya are rather wet, thus providing the right conditions for
tea growing as well as sufficient water to assure local hydro potential. This observation
appears to be holding true for most tea growing areas in the Eastern Africa region, possibly
with a small exception for tea growing at rather flat areas of Tanzania.
Not surprisingly considering the logistics involved, tea factories are always near tea growing
areas. It follows that where there are tea factories, there must be also a hydro potential. Only a
few private tea plantations/factories in the region have installed any hydro equipment to meet
their private power needs. The proposed project study aims to identify hydro potential near all
tea factories in the region. Such micro hydro plants with sizes between 300 kW and 1 MW
should and could first of all meet the power needs of these tea factories in an environmentally
friendly way.
The tea factories typically cover areas with 2-5 km radii from the processing plant. Clusters of
tea factories with each factory no more than some 5-6 km from the next can be identified in
various tea growing areas. In order to increase power supply security, such clusters of mini
hydro plants could be interconnected. A cluster development of mini hydros may have another
positive impact: Because of the number of power plants involved, design, mobilization of
contractors, electro-mechanic equipment and installation, training, stocks of spare parts, etc
may all be at reduced costs, thus making a cluster development even more attractive to
technology providers and each individual project cheaper. The opposite may also exist. In
some areas one particular site may have sufficient hydro potential to connect a number of tea
factories. Should potential hydro electricity exceed the electricity requirements of both tea
factory and nearby communities, such excess power could be used to even thermal power
requirements of tea leave drying.
Thermal Energy
Tea factories either use wood fuel (self grown or purchased) or fossil fuel for heat applications.
Solar water heaters could also contribute minimally to the high temperature requirements of the
flush drying process. It is roughly estimated that each 4 hectares of tea plantation require
approximately 1 hectare of woodlot in order to cover the thermal power requirements of the tea
processing plant. Most tea estates appear to have sufficient wood plantations to cover their own
needs. On the other hand it appears that KTDA factories, cooperatively owned by small holder
tea farmers commonly are faced to meet (part of) their thermal needs by furnace oil. A number
of tea factories already have nurseries for seedlings of fast growing tree varieties to be
distributed to tea farmers and to be planted on marginal land (e.g. too steep for tea growing). In
a number of cases wood fuel production is not adequate to cover the year round thermal energy
needs of a factory and possibly sustainable production woodlots may have to be developed in
14
addition. Fast as well as slow growing tree species should be considered in order to assure
biodiverse plantations. Depending on the location, and if and when available in considerable
and recurrent amounts, other biomass residues (e.g. coffee, sugar industries) can be considered
to (partly) meet the thermal power requirements. A small survey conducted in collaboration
with EATTA during the time of actual proposal preparation clearly showed that most tea
factories do not depend on fossil fuel (furnace oil) to meet their thermal energy requirements.
Most factories appear to have their own wood lots as main source, while some purchase wood
fuel from tea farmers and/or other sources.
Depending on the actual location, houses of tea farmers, but also schools, clinics etc. may or
may not yet be electrified. While the tea factory will be the dominant productive use, tea
farmers and the communities could diversify their earnings through other activities. Depending
on the area, communities just around processing plants have remained unelectrified. It may
possibly be an option to use such small hydro plants in addition to cover the demand of the tea
factory itself as well as meet residential, social and possibly even commercial demand for
electric power in the tea farming area. This will make such a mini hydro 1 option commercially,
socially and politically a very attractive option.
During the actual phase of project formulation, 3 French experts executed a field mission to a
cluster of 7 tea factories managed by the Kenya Tea Development Agency (KTDA). This field
mission is part of a pre-feasibility study on small hydro potential for tea factories, a partnership
between the previously mentioned KTDA and the French Agency for Energy and Environment
(ADEME). Besides the collection of field data (for load forecasts, settlement structures of
nearby communities, etc), also the hydro potential was assessed based on surveys, maps and 20
years of river flow data. For 7 tea factories in one single area the demand would roughly
amount to 7 x 500 kW = 3.5 MW. The mission returned with an indication that the area could
easily produce 10 MW for at least 60 % of the time, with 3 extra sites of 300 –700 kW in
reserve. Autonomous power generation for the tea factory is possible in a number of cases.
Excess power would indeed be available for rural electrification for power sales for the grid.
See appendix F for a short summary of the findings.
Rural Electrification
The status of electrification of communities around tea processing plants appears to be varying
per country and per location. Whereas the tea factory may primarily want to consider meeting
its industrial power needs, tea farmers and tea factory workers in general will be keen on
realizing access to electric power. Especially if the tea factory is cooperatively owned (all the
tea factories of the Kenya Tea Development Agency are owned by tea farmers cooperatives)
the prime interest of the individual tea farmer may not be the IRR of a small hydro plant but
the household connection to electricity. The opportunities of an added electrification
compound may lend itself to the establishment of public-private partnerships (tea
factory/utility), the creation of an Energy Service Company (ESCO), or a tea factory venturing
into power generation and sales (IPP) or even as distribution with a mini-grid to nearby
communities. Such an initiative may count on possible external support from new initiatives
such as the EUEI (European Union Energy Initiative for Poverty Reduction and Sustainable
Development).
Tea and Small Hydro in the EATTA Member States
1
The term “mini hydro” is here used for hydro applications with capacities between 100 and 1,000 kW
15
The “Greening of the Tea Industry in Eastern Africa” concept was brought by EATTA to the
attention of its Board during an official Board Meeting on July 31, 2004 (see Appendix C
mission report). The EATTA’s official reaction in the minutes of the meeting (see Appendix
D, minutes of the EATTA Board Meeting) is that the tea industry would welcome such an
initiative.
The situation of both tea production and (potential for) hydro-power generation will be briefly
discussed for each of the EATTA member states.
Burundi
Total quantity of made tea in 2003 was 7,400 tons with 5,500 tons sold through Mombassa for
export. Increase of production (up to 10,000 tons) and lowering of production costs are seen as
the biggest challenges. Today, there are 5 tea factories operating in Burundi. The Office du
The Burundi is currently in the process of creating farmers associations.
In 1995 hydro-power provided virtually 100 % of all electric power in Burundi. In 1996 a set
of standby diesel units with a capacity of 5.5 MW was installed. In 1997 the country had 43
MW of installed electrical capacity of which 32 MW was installed in hydro-power projects,
which is an estimated 10 % of the technically and economically feasible potential. Some 27
small hydro plants (defined as plants up to 1 MW) are currently in operation in Burundi with a
total capacity of approximately 3 MW. It is not certain how many of these small schemes are
actually in operation today.
Kenya
Total tea production in Kenya amounted to 293,632 tons with 217,063 tons sold through the
Mombassa auction for export. Kenya has a total number of 95 operational tea factories.
Kenya’s energy policy emphasizes the need for sustainable energy supplies in adequate
quantities at effective costs, so as to achieve national development goals. The policy also
emphasizes delivery of quality energy services so as to ensure that Kenya will continue to
attract investments in those economic activities of which energy inputs are basic to production
at competitive prices.
Kenya has made significant progress in reflecting electricity tariffs to long run marginal cost,
restructuring the power sector, opening the power generation market to private investment, and
reforming the sector’s legal and regulatory environment. Specific progress achieved under the
reform program includes:
a. Unbundling of power generation, transmission and distribution activities on one
hand and incorporation and commercialization on the other hand;
b. Entrance of IPPs;
c. Elimination of government subsidies to the sector with possibly the exception of
those to rural electrification;
d. Amendment of the Electricity Act which ascended in 1998 to legislate private
sector participation and the establishment of an independent regulator.
Malawi
16
Total tea production increased in 2003 to 41,965 tons with only 5 % (2,262 tons) sold through
the Mombasa Auction. Malawi has all together 23 tea factories
The hydro-power resources of Malawi have not yet been described in detail but the potential of
a number of major rivers and sites has been identified. A figure of 6,000 GWh/year of
technically feasible potential is cited by the small hydro website. There is some 220 MW of
hydro capacity in operation. The total plant capacity of 240 MW is threatened by serious
siltation. There is only one 4.5 MW small hydro plant in operation in Wowve. In addition,
there is the 600 kW Zomba micro hydro-electric plant.
Mozambique
Dry weather conditions, difficulties with the availability of spare parts, transportation and
finance restricted the tea output to 1,122 tons with only 788 tons sold through Mombasa.
Mozambique has 7 tea factories in operation.
A large hydro capacity is already developed on the Zambezi River (Cahora Bassa) with power
exported to neighboring countries. Mini/micro hydro for decentralized electrification is not yet
developed.
Rwanda
Total tea production in 2003 was 15,484 tons while 9,457 tons were auctioned through
Mombasa. Rwanda’s development of the tea sector is hampered by low quality, inconsistent
manufacturing and high transport costs. There are 10 tea factories in Rwanda.
Rwanda has a total hydro electric potential of approximately 100 MW nearly a third of which
has been developed at four small hydro electric stations and a number of independent microhydro electric stations. Only 5 % of Rwanda’s population has access to the national power
grid. One of the main challenges of the new government is to address the crippling power
shortage that forced widespread power rationing. The national utility (Electrogaz) is trying to
bridge the short fall by using emergency diesel generators, which are slowly coming on line.
Tanzania
In the year 2003/4 Tanzania produced 29,751 tons of tea. A total of 14,571 tons was auctioned
through Mombassa. All in all there are 18 tea factories in Tanzania.
Access to reliable electricity remains rather poor. Though rural electrification has been pursued
since 1961, only about 1% of the rural population has access. While the reform aimed at
privatizing TANESCO might improve the overall national electrification situation, it is
unlikely to have significant impact on the power situation in tea factories mainly due to the
technical limitations of the infrastructure and disperse nature of the factories.
The tea zones are expected to have a sufficient but yet untapped hydroelectric potential.
The small hydro potential in Tanzania is said to be attractive. With hydro electric power
development estimated to be 3,800 MW of which only roughly 382 MW has been exploited,
Tanzania should be open to increased investments in its hydropower sector. Moreover, with
large isolated rural communities unable to access the national grid, the government of Tanzania
placed rural electrification high on its agenda.
17
Uganda
The total tea output in 2003 rose slightly to 36,293 tons with the bulk (34,494 tons) sold
through Mombassa for export. 27 tea factories are currently operating in Uganda; 3 tea
factories (in Masaka) are currently being rehabilitated.
Uganda has developed a rural electrification strategy that aims to increase access to 10 % by
2010. The strategy supports use of renewable energy and provides for subsidies to level the
playing field. The country’s electrification level remains rather low with only about 5 % of the
total population having access to electricity and less than 1 % of the rural population. Though
new generating facilities were installed since 2000, the availability especially in rural areas
remains poor. The tea factories rely on a grid that experiences frequent blackouts.
Uganda enacted the electricity act in 1999. This act removed the monopoly power of Uganda
Electricity Board allowing for independent generation and hence paving way for the entry of
IPPs. In addition an electricity regulatory board has been established. The government is in the
process of concessioning, distribution and transmission to increase role of the private sector. A
rural electrification fund which will partially subsidize capital investments to facilitate
improved access in rural areas has also been established.
The 10-year Energy for Rural Transformation (ERT) project being implemented by the World
Bank aims at developing rural energy and information technology so that they make a
significant contribution to bringing about rural transformation. Notably emphasis is given to
PV though micro-hydro and cogeneration will also be supported. One of the initial Cogen
project that has been earmarked for support under the ERT is the Kakira sugar company. The
ERT will consider provision of support on case-by-case basis and hence could be a partner for
development of micro-hydro at the tea factories.
Zambia
The total production in 2003 amounted to 1,125 tons of tea and 310 tons auctioned through
Mombassa for export. There is an effort to increase the area under tea production. Currently,
there is only one tea processing plant in Zambia (Kawambwa tea factory). There is no
organization/agency representing the tea sector.
Hydro represents 99.8 % of all power produced by the national utility ZESCO, with more
capacity available than can be absorbed nationally or exported. UNIDO is currently in the
process of developing three sites of micro hydro plants to energize small mini grids for rural
development.
Zimbabwe
In the year 2003, total tea production was 21,993 tons with a mere 567 tons sold through the
Mombassa auction. Most tea is exported to neighboring countries (Kenya, Botswana, South
Africa, Zambia) or locally consumed. Currently there is a serious manpower shortage
especially in tea plucking (Mozambican workers returning home because of harsh economic
conditions in Zimbabwe). There are 6 tea factories in Zimbabwe. Today only one factory is
associated with the EATTA.
18
The gross theoretical hydro-power potential is 18,500 GWh/year, and the technical potential is
estimated at some 17,500 GWh/year. About 19 % of this technically feasible potential has so
far been exploited. A small number of mini/micro hydro plants are in operation. The small
hydro website mentions three with a total capacity of less than 1 MW.
Summary Tea Production 2003:
Table 03 provides a quick overview of the overall tea production in the region. Purely seen
from the point of view numbers of tea factories as well as quantity of tea produced, it is
obvious that Kenya is by far the largest producer and has probably the largest associated minihydro project potential.
Table 03: Tea Production EATTA – Member Countries
19
TEA PRODUCTION EATTA - MEMBER COUNTRIES - 2003
350,000
300,000
Tea Tonnes/annum
250,000
200,000
150,000
100,000
50,000
e
bw
bi
a
Zi
m
ba
Za
m
da
ga
n
U
a
ia
Ta
nz
an
an
d
w
R
bi
qu
e
i
oz
am
al
aw
M
M
ya
Ke
n
Bu
ru
n
di
0
2 B) Problem Statement
Though most tea growing areas have high hydro-power potential that could meet the electrical
power needs of the factories and the surrounding communities, little has so far been exploited.
Instead, the tea factories rely on high cost and unreliable power from the national grid and
gensets with negative consequences for the environment and on the cost competitiveness of
their products.
GHG Emission:
The main reason for the low exploitation of hydro-power is lack of investment capital,
technical data and expertise, obstructive legislation and regulatory framework and overall
awareness of the potential long term benefits. In many cases there is no legal provision for or
incentives for distributing power to communities within the environ of a privately owned
generating facility.
Seen from a National Energy Sector perspective, the shift from grid power to auto-generated
hydropower will free capacity that can readily be absorbed for other purposes considering that
in all countries rural power consumption is often not met and in all cases is growing. This will
20
everywhere result in the need for additional power plants. Tea factories are always located in
rural areas; shifting from grid-based power to hydro will basically avoid or delay the need for
additional (fossil fuelled) power plants, thus lowering projected GHG emissions that would
otherwise have been produced. In addition, a hydro based power supply that is more reliable
than the grid (in terms of both quality and quantity) will reduce the need for back-up generator
sets to operate: Already now load shedding is common, forcing the tea factories to start their
back-up power supplies (at least some 5 % of all real time, factory owned generators are in
operation), and in times of acute power shortages even much more. Such power outages, short
as sometimes they may be, occur frequently (2-3 times per day). Shifting back and forth
between grid and gen-sets causes financial losses much larger than 5 %. Estimates are that
losses of up to 15 % are incurred by unreliable power supply.
2 C) What would happen without GEF? - Baseline scenario
In the baseline scenario the tea factories will continue to rely on unreliable grid electricity and
diesel gensets for electrical power. This will have both local and global implications.
Combustion of bunker fuels and operation of diesel gensets generate GHGs. In most countries
the overall national generation capacity is lower than demand. Hence continued used grid
electricity in tea factories that could potentially use alternative generation sources deprives
service provision to the many without access. As such it curtails possibilities for switching
from traditional to modern fuels as well as embarking on income generating opportunities:
Freeing grid based generation capacity will postpone near-future (fossil based) generation
expansion plans.
With the current sharp increase of fossil fuel prices, which eventually will also lead to higher
electricity tariffs, it is only logical to expect that tea industries are gradually forced to consider
alternative options. The prospect of individual tea factories venturing into mini-hydro without
proper technical support is therefore real: Improper analysis of flow data, sub-standard design,
civil works, equipment and installations will all lead to rapid disappointment with the
technology, effectively preventing any further development.
2 D) What would happen with GEF? - Alternative scenario
The proposed Mini Hydro Program should support a region-wide shift of tea processing plants
away from grid and fossil fuels to Hydro, there where it is both economically justifiable and
environmentally benign. Depending on the location of other tea factories in one single area, a
cluster development of mini hydro plants might be an option to further reduce costs. Adding a
rural electrification component of nearby areas for commercial/social purposes is always worth
considering in the case of excess power generation. Power might be available for other
purposes after production hours. Periods of high tea leave production (in which double
production shifts are necessary -(day & night) will always coincide with periods of high water
discharge in rivers (rainy seasons) and (thus) extra available generation potential. Energy
efficiency of current operations will always need to be evaluated first in order to come to
optimal designs. Converting tea factories to (mainly) operate on hydro should start with a
careful analysis of power requirements and actual consumption. In some cases a more
staggered production process may reduce (peak) power demand; in other cases the use of more
energy efficient electro-motors may substantially reduce daily power consumption. An energy
audit in every factory should actually precede any local hydropower initiative and therefore be
part of any (pre) feasibility study.
21
In a number of cases, potentially more hydro power can be generated than the tea factory (-ies)
will actually need. The primary objective of the tea factory will be to develop sufficient power
for its own needs, and at all times. Excess power for rural electrification purposes can be
realized by “overdimensioning” the mini hydro plant and taking local commercial, social and
residential loads into consideration. Should tariffs for (small scale) power sales to the grid
(utility) be acceptable, excess power could also be injected into nearby MV lines. Such rural
electrification efforts will quite logically have an impact on the economic and financial
feasibility of the proposed projects.
Public Awareness and Climate Change:
Introducing small hydro power plants to meet local energy needs of both tea factory (the
majority of the population in these area depend directly or indirectly at the tea sector) as well
as all the power requirements will directly instill a sense of responsibility of such communities
for the energy source; the local river (flow). The importance of continuous water flow (even
against backdrop of possibly reduced rainfall due to climate change) will force both industry
and population to preserve or even improve water retention in upstream watershed areas and
actively protect such areas.
Objective:
The objective of the proposed Mini Hydro Program is to promote investment in small hydro
power through a reduction of the electrical energy costs in the tea processing industries in
countries covered by the East African Tea Trade Association and meanwhile increasing power
supply for rural electrification as well as power reliability and reducing Greenhouse Gas
emissions through removal of barriers related to financial weakness, lack of technical
awareness and capacity as well as all obstacles related to power sector policy frameworks.
Specific Objectives:
 To provide financial and technical assistance that facilitates the switch from grid-based
electricity as main power source to Mini Hydro as locally available alternative;
 To facilitate access to electrical power for communities adjacent to tea factories and/or
Mini Hydro Plants.
Outcomes:
a. A specific project-oriented financing scheme that encourages mini-hydro development
in East Africa is created;
b. Mini hydro projects for tea processing industry in EATTA countries developed and
implemented;
c. Technical capabilities concerning design, operation and maintenance of mini-hydro
electrical power systems enhanced within the tea sector and civil engineering sector of
each participating country.
d. Quality standards for mini hydro design, installation and maintenance and operation
have been set for all EATTA countries.
e. Awareness on potential for (mini) hydro as technically viable, economically feasible
and environmentally friendly alternative to current (conventional) practices has been
raised;
22
f. A regulatory framework for power generation and distribution of (mini-hydro) power
has been established in all participating EATTA countries (water rights, generation and
distribution licenses and tariffs);
g. Households, commercial and social establishments in unelectrified communities near
tea processing plants have been connected to the plants’ mini hydropower supply;
h. Regional increase in local manufacturing of mini-hydro system components;
i. One or more models for electric service provision to tea factories (and communities- if
relevant) are established.
j. Communities aware of the value of well preserved watershed catchment areas
upstream.
Specific Outputs:
 6 Mini hydro demonstration projects established in at least 3 EATTA member
countries; preferably with an attached rural-electrification component2;
 Partnership between EATTA and UNEP has been established (MOU);
 Up to 5 extra pre-feasibility studies for promising mini-hydro sites have been prepared;
 Project financing mechanism established (dedicated financing window for project
development including incentives);
 EATTA project facilitation skills enhanced & project implementation committee
operational.
Considering the relevance of the tea sector in every EATTA country, it is obvious that the
opportunities for replication vary per country.
GHG Emission Reduction:
At this preliminary stage it is not clear what hydro-potential is available, and /or should be
developed. It is assumed that on average 500 kW per tea factory shall be installed to meet
power requirements of the tea factory and of nearby communities.
For 6 demo-projects: 6 x 500 kW (rate capacity) x 0.6 (assumed load factor, taking non
productive nights, low community loads into consideration) x 24 hrs/day x 365 days/annum =
15,768 MWH/annum. Assuming this 6 x 500 kW will now or in the near future replace diesel
powered electricity generation, using IPCC emission factor for diesel of 1,019 ton CO2 MWH
this would result in a mitigation of some 16,000 tons of CO2. There are all together 150 tea
factories in the EATTA region. Should it be possible to develop hydropower installations at a
modest 50 tea processing plants of each 500 kW, CO2 emission reductions would amount to
130,000 ton.
In some case the hydro potential might be substantially larger than the demand of the tea
factory. Pre feasibility study results for a cluster of tea processing plants in the Aberdares
(Kenya) indicate that there might even be more than sufficient power not only to meet power
requirements of tea factory and community. In that case, it may even be considered to use
(excess) electricity for thermal purposes (tea leave drying), thus substituting furnace oil or
wood fuel.
2
Considering volume of tea production and number of tea factories, the potential for mini-hyrdro project
replication will be highest in Kenya, Malawi, Tanzania and Uganda. However, technical training workshops and
support shall be made available to all EATTA members.
23
3. SUSTAINABILITY (INCLUDING FINANCIAL SUSTAINABILITY)
The power supply systems will be owned by the respective tea factories, as these factories will
have directly contributed funds for acquisition. Though support will be provided to such
factories through the project, this would only cover the incremental costs of barrier removal.
By investing in these systems the tea factories will reduce their energy costs and the savings
accrued will be available for system maintenance. In addition the project aims to provide
technical training on operation and maintenance to local individuals. Hence these technicians
will be available to provide these services beyond the project lifetime. The objective is not to
create an engineering /consulting branch within EATTA. By then mini-hydro projects in the
tea industry as well as beyond (community based hydro) should have gained sufficient
momentum with the technical expertise (and possibly even local manufacturing of system
components) available in sufficient amounts.
The productive uses at the tea factories and local diversification activities will provide the
revenue stream to achieve financial sustainability. Also a specific financing window for tea
based mini hydro projects is envisioned to last for an extended period.
4. REPLICABILITY
Through supporting the establishment of a favorable financing mechanism, the project will
enable investments of hydro for all tea factories in EATTA member countries. Given the fact
that on of the key barriers is investment finance, availability of this low cost finance will
encourage many tea factories to invest in the technology. The project will also establish an
awareness raising system within EATTA, which will vigorously and continuously engage with
the tea factories and inform them of the financing opportunities as well as the economic and
environmental implications of adopting hydro technology. It is expected that the partnership
established between UNEP and EATTA would foster into the longer term, beyond the project
period and hence UNEP would continue raising awareness within the EATTA and its members
and hence facilitate replication.
There are close to 150 tea factories in the East African Region. Based in a preliminary survey
most factories appear to be aware of nearby hydro potential. In addition there might be other
industries in the small hydro potential areas such as creameries. Using the small hydro for tea
processing as an example, other industries may consider shifting to small hydropower. Unmet
power demands do exit in all of the unelectrified areas of a country (typically less than 10% of
the rural areas in East Africa have remained unelctrified. Assuming the tea industry can
provide momentum to mini/micro hydro development in East Africa (resource assessments,
project implementation, training, local manufacturing of system (compounds) a spin off might
be in the field of community based small hydro for rural development (small industries,
domestic, hospitals, schools) thus adding to the overall replicabilty.
5. STAKEHOLDER INVOLVEMENT/ITENDED BENEFICIARIES
The EATTA is the principal proponent and stakeholder especially in the PDF-B project phase.
The EATTA board members were informed of the project proposal by its Secretary and their
opinion was sought with the aim of providing feedback to UNEP-GEF. As a follow up to these
consultations, a draft concept note was circulated by EATTA to its board members and later
presented at a board meeting. During the meeting the board members were also individually
consulted with the aim of establishing their interest and commitment (see Appendix C, D and
24
H). Detailed information on status of EATTA, management structure and Small Hydro
Program Implementation is attached in Appendix L.
Individual tea companies have also been met and the project discussed further. These
companies have also presented views and sought clarifications on the project.
Not only have EATTA board members explicitly indicated support and interest in the project,
but so also several individual tea companies as potential investors
D – FINANCING
1. FINANCING PLAN
At this stage of project development it is envisioned that the project aims to realize some 6
mini hydro projects as demonstration projects for tea factories, preferably with a
complementary rural electrification scheme (independent mini grid for local distribution or a
distribution net owned and operated by a national utility). At this stage, proposed full project
budget is indicative only. Duration of the project set at 4 years.
Actual financing shall very much depend on the nature of the mini hydro project:
Table 04:
Isolated Mini Hydro
Grid connected Mini
Hydro
End –Use
Tea Factory
Tea Factory & Community
Tea Factory
Tea Factory & Community
Financing
Tea Factory
Tea Factory, Utility, Cooperative, ESCO? Tea
factory as IPP?
Tea Factory
Tea Factory, Utility, Cooperative, ESCO? Tea
Factory as IPP?
Sources of finance will likewise vary with the nature of the project: A power supply
exclusively for the tea factory may have a relatively high profitability: Financing shall be the
main responsibility of the tea factory itself. Should however power be generated for rural
electrification purposes, the profitability might be substantially lower while other social and
commercial development interests are being served. At this stage (March 05) two parties have
indicated strong interest in participation: The African Development Bank: A financing window
for Hydro Power in tea industries is to be considered through the private sector window of the
AfDB. A rural electrification (through a possible private/public partnership) is of great interest
not only to the AfDB but also to the German GTZ in combination with the EUEI (European
Union Energy Initiative for Poverty Alleviation and Sustainable Development.
25
Table 05: PROJECT COSTS (million US$)
Component
Indicative
Cost
Total
M USD
Project Management office, operational cost,
4 years
Feasibility studies, surveys (topo, soil, etc),
detailed design for 6 mini hydropower plants
500 kW each @ USD 500/kW
Construction 6 mini hydropower plants
500 kW each @ USD 2,500/kW for civil
works, electromechanical equipment &
installation
Local distribution network – grid connected
or independent (arbitrarily estimated at USD
250,000 per site)
Additional 6 pre feasibility studies @ USD
20,000
Hands-on training & training course during
pre-feasibility, survey, design and
construction phase for tea sector engineers,
civil engineers in all EATTA countries 7 x
USD 100,000
TOTALS
Private
Sector
(Tea
Industry
&
EATTA)
M USD
Utility/
ESCO
GEF
Other
Donors
M USD
M USD
2.00
0.10
M USD
0
1.50
0.50
0
0.50
0.50
7.50
6.00
0
0
1.50
1.50
1.00
0.90
1.00
0.50
0.12
0.05
0
0.07
0
0.70
0.10
0
0.40
0.20
13.32
6.75
1.00
1.97
3.60
Notes:
1) Private Sector: EATTA as the Tea Industry Association of the East Africa region shall be involved in Project
Management, hosting the Management office(s), support set-up of training courses with tea industry etc. The
financing of actual mini hydro projects including (pre) feasibility studies shall be a direct responsibility of
individual tea industries.
2) Utility: Assuming local distribution networks can be financed through intervention from government/utility.
3) Other donors: Some other agencies have expressed interest in the concept including ADEME
4) Project Management Office manned by both International and national experts/staff. Some experts on parttime basis. The core team is to manage the project and execute all tasks of the Full Size Project,
coordinating all phases of realization of power plants, setting up financing schemes, organization of training
courses, etc.
5) Feasibility studies including topo surveys, soil analyses etc, as well as detailed design will serve as hands on
training ground for engineers from the tea sector as well as civil engineers. Training courses/workshops will
be organized in every country to disseminate experiences, theory, practical solutions etc.
6) Construction of 6 Mini Hydro Plants: The average size has been set at 500 kW per mini hydro plant. For
civil works, electro mechanical equipment and installation an amount of USD 2,500 per kW has been
reserved.
7) During implementation of the Full Size Project another 6 pre-feasibility studies shall be undertaken for
hands-on training purposes, it shall aim to determine whether additional prospects exist for future mini hydro
project development.
8) Training courses and Workshops to be organized for Management Staff and Engineers in the Tea Sector and
Engineering business should take participants through all stages of a mini hydro project development cycle.
Possibly in a number of countries with sufficient industrial base additional workshops/training can be
undertaken with the metal manufacturing/engineering sector on local production of mini hydro equipment.
9) Rural Electrification: The rural electrification component is an add-on to te actual commercial hydro powerdevelopment for meeting tea factory energy demands. The development of public-private partnerships for
rural electrification should generate intrest from various parties. The EUEI may consider active participation
in terms of project finance as well as technical support in actual project realization.
26
2. CO-FINANCING
Some organizations have expressed interest in participation in this project. The draft proposal
shall be used to seek interest and commitment from additional donor organizations.
3 IMPLEMENTATION/EXECUTION ARRANGEMENTS
Program Management Structure
The East Africa Tea Trade Association is based in the port of Mombasa, Kenya. The EATTA
operates the Tea Auction of Mombasa for all East African tea. It is engaged in Tea
Warehousing and Brokerage. These are its core activities. For a complete overview please
refer to appendix G. Members of the EATTA are either engaged in the processing of tea leaves
into tea or in the tea trade. Members of EATTA are located in all countries that produce tea in
the region: Burundi, Kenya, Malawi, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe. In
some cases individual tea manufacturers are EATTA members, in other cases entire groups or
associations are registered as single members. Example: In Kenya, the KTDA – Kenya Tea
Development Agency – with 56 tea factories is classified as one single member. The EATTA
liaises with various National Authorities on behalf of its members. Up to this day, the EATTA
has not (ever) been engaged in any projects that bears any similarity with the proposed
“Greening the Tea Industry in East Africa”. It is proposed that UNEP (as Implementing
Agency) collaborates with the EATTA (as Executing Agency) in the realization of the
proposed tea factory based hydro project.
A Steering Committee shall consist of
representatives of the tea manufacturers, as represented in the EATTA – Board, but only of
those countries that actually will participate in the execution of the Full Size Projects (actual
demo project realized).
EATTA shall host a Project Management Office, in which (international) experts shall work on
all the tasks defined, creating an enabling environment for mini-hydro development in tea
factories, rural electrification, hydro pre-feasibility and feasibility studies including detailed
design, training of technical staff in Civil Engineering and Electrical Engineering sector as well
as tea factory technical staff and liaise with Ministry of Energy /Industry etc. and national
utilities. After the PDF-B a number of tea factories shall be invited for actual demo project
mini hydro power plant implementation. In that moment these shall be direct linkages between
the EATTA Project Management Office and the individual tea factory. Hands-on training
sessions shall be considered with the entire national tea sector as well as civil
engineering/electrical engineering sectors (industry associations, consulting/engineering firms
etc). The PDF-B experts are invited to design these procedures and linkages in detail.
27
Table 06 “ Greening the Tea Industry Of East Africa” Organizational Set-Up
Burundi
Tea Auction
Mombassa/Market Inf
Uganda Tea Devt Agency/
Uganda Tea Corporation
Kenya
Malawi
Tea Warehousing
(Standards, M&E)
Office des Cultures
Industrielles du Rwanda
Mozambique
Rwanda
Tea Brokers
(Standards, M&E)
Office du The du Burundi
Tanzania
Uganda
EATTA core activities
Kenya Tea Development
Agency/Kenya Tea Board
Zambia
Zimbabwe
CURRENT EATTA
Institutional/regulatory linkages
EATTA Members Tea
Production/Tea Trading
EATTA – East African Tea Trade Association, Mombassa
Project Proponent and Facilitator
Executing Agency
UNEP/DGEF
Implementing
Agency
PROPOSED PROJECT
"Greening Tea in East Africa”
Steering Committee (SC)
Greening Tea in East Africa
Project Management Office (PMO)
Regulatory Framework IPP,
Tariff, Licenses
Technical training Surveys (pre-)
Feasibility Studies, Detailed Designs,
Pilot Project Development
Ministries of Energy/
National Utilities
Civil Engineering & Electrical
Engineering Sectors
Burundi
Burundi
Kenya
Development, Project Financing.
Tea Factories
in East Africa
Burundi
Kenya
Malawi
Technical Training (pre-) Feasibility
Studies, Detailed Designs, Pilot Project
Kenya
Malawi
Malawi
Mozambique
Mozambique
Mozambique
Rwanda
Rwanda
Rwanda
Tanzania
Tanzania
Uganda
Uganda
Zambia
Zambia
Zimbabwe
Zimbabwe
28
Tanzania
Uganda
Zambia
Zimbabwe
E – INSTITUTIONAL COORDINATION AND SUPPORT
1) CORE COMMITMENTS AND LINKAGES
NEPAD
NEPAD recognizes that energy plays a critical role in the development process, first as a
domestic necessity but also as a factor of production whose cost directly affects prices of goods
and other services, and the competitiveness of enterprises. In view of the fact that small
market sizes and low purchasing power have been the main barriers to universal access to
modern energy for development, NEPAD recognizes that the “business as usual” approach will
not meet Africa’s energy demand, and adopted a partnership strategy to promote development
of the African energy infrastructure. With its aim of addressing Africa-wide electricity
problems, this Cogen initiative clearly falls within the NEPAD agenda.
The objectives for the Energy Sector under NEPAD, as stated in the NEPAD document are:
 To increase Africans’ access to reliable and affordable commercial energy supply from 10
to 35 per cent or more within 20 years;
 To improve the reliability and lower cost of energy supply to productive activities in order
to enable economic growth of 6 per cent per annum;
 To rationalize the territorial distribution of existing and unevenly allocated energy
resources;
 To strive to develop the abundant solar resources;
 To reverse environmental degradation that is associated with the use of traditional fuels in
rural areas;
 To exploit and develop the hydropower potential of the river basins of Africa;
 To integrate and transmission grids and gas pipelines so as to facilitate cross-border energy
flows;
 To reform and harmonize petroleum regulations and legislation on the continent.
The NEPAD document identifies actions that need to be taken to address these objectives: the
establishment of an African Forum for Utility Regulation and regional regulatory associations;
the establishment of a task force to recommend priorities and implementation strategies for
regional projects, including hydropower generation, transmission grids and gas pipelines; the
establishment of a task team to accelerate the development of energy supply to low-income
housing; and broadening the scope of the program for biomass energy conservation from the
Southern African Development Community (SADC) to the rest of the continent.
NEPAD has drawn up a short-term Action Plan, which identifies its priorities in the Energy
Sector. The Summary Action Plan (STAP) provides a wide range of activities, some in more
detail, than others. It comprises of 23 energy projects; 7 power systems projects, 3 gas/oil
projects, 4 studies, 3 capacity building projects, and 6 facilitation projects. This STAP is being
revised and a medium term action plan is being developed. The proposed “Greening the Tea
Industry in East Africa” initiative fits within the overall theme of facilitation projects.
GEF Activities in related Sectors:
Table 05 provides an overview of activities that only very randomly will touch on the proposed
“Greening of the Tea Industry in Eastern Africa”. This proposed concept is basically to be
considered a private sector development with attached to it a rural electrification component
wherever relevant and feasible. In addition, excess electricity might be absorbed by national
29
electric power utilities. As such, all private sector reform aspects that deal with the regulatory
framework of IPP licensing of power generation and distribution as well as firm/non firm
power tariffication are of direct relevance to this project. Technology-wise, as well as
implementation-wise, there appears to be no overlap with other existing projects/programs.
Table 07: Relevant GEF related projects in Southern/Eastern Africa (July 2004)
Country
Project Name
Mozambique
Energy Reform and
Access Project
Zambia
Project
Type
Full Size
Implementing
Agency
IBRD- The
World Bank
Approval Date
Relevance/Comments
Dec 07, 2001
Renewable energybased electricity
generations for Isolated
mini-grids
Removal of Barriers to
Energy Conservation
and Energy Efficiency
in Small and Medium
Scale Enterprises
Renewable Energy
Project
Full Size
UNEP
May 21, 2004
Encourages Renewable Energy Investments
in solar, wind, micro hydro and possibly
biomass gasification. Phase I to remove
barriers. Actually tea hydro projects will fit
the objectives.
This project is to focus on community based
hydro-developments.
Full Size
UNDP
Jul 1, 1998
The GEF-KAM project executed energy
audits in 6 tea factories. Energy saving of
up to 20 % is deemed possible.
Full Size
IBRD- The
World Bank
May 16, 2003
Aims to promote private sector led off grid
rural electrification through SHS and small
hydro. Tea factory owned hydro power
should fit in this programme.
Uganda
Rural Energy for
Development
Full Size
IBRD- The
World Bank
May 1, 2000
Malawi
Barrier Removal to
Malawi Renewable
Energy Program.
Full Size
UNDP
May 7, 1999
Zambia, Tanzania
Africa Rural Energy
Enterprise Development
(AREED)
Full Size
UNEP/UN
Foundation
PDF-B for
global
expansion June,
2003
Tanzania
Transformation of Rural
Photovoltaics Market
Full Size
UNDP
May 16, 2003
Kenya
Ormat Olkaria III
Geothermal power
development
Power Sector Reform
for Increased Access to
Electricity.
Full Size
IBRD/IFC
Dec. 07, 2001
Capacity building and technical assistance
cover a wide range of energy technologies.
As such, the project stands to benefit from
expertise in decentralized power generation
and distribution.
The project appears to essentially focus on
Solar PV. However, the project might
support also the introduction of other
renewable energy options in addressing
institutional, information and investment
barriers.
Currently AREED is implemented in five
African Countries and provide early stage
funding and expertise development services
supplying clean energy technologies.
Budgets in AREED are more appropriate
for small-scale approaches.
Concentrates on solar home systems and PV
for schools and hospitals with some limited
productive uses. Mini hydro needs larger
power requirements.
Geothermal power generation is basically
large scale and national grid connected.
Full Size
IBRD/World
Bank
Not yet
approved
Industrial Energy
Efficiency Project
Full Size
UNDP
May 10, 2000
Kenya
Ethiopia
Zambia
Kenya
Enabling policies, institutional
environment, increased private sector
participation. Project aims to replace
existing diesel with hydro. Tea hydro
project would fit into new policies.
Energy Audits are being completed for tea
factories. Preliminary results indicate
reduction of energy consumption for drives,
fans, cutters up to 20 % is possible. Motors
often over designed. Immediate relevance
to sizing of hydro plants.
In addition to projects under implementation, also GEF pipeline entries have been scanned for
their relevance to the proposed regional hydro-tea proposal:
30
Table 08: GEF Pipeline Entry (October 2004)
Project
ID
1191
Country
Agency
Title
Zimbabwe
UNDP
1613
Malawi
World
Bank
Removal of Barriers to E.E and
associated GHG reduction in
Zimbabwe Industry.
Energy Access, Expansion and
Development Project
2119
Regional;
Kenya,
Ethiopia,
Djibouti,
Tanzania,
Uganda, Eritrea
Kenya
UNEP
African Rift Geothermal
Development Facility
700,000
UNDP
MSP
Small Scale (households); different market.
Benin, Burundi,
Cameroon,
CongoBrazzaville,
Gabon,
Equitorial
Guinea, Mali,
Central African
Republic,
Democratic
Republic of
Congo,
Rwanda, Togo
UNDP
Removal of Barriers to Energy
Efficiency in the Biomass Energy
Sub Sector
First African Regional Mini/
Micro Hydro Power Capacity
Development Project And
Investment in Rural Electricity
PDF-B
(ongoing)
13 Micro hydro demo projects identified for
Burundi, 10 demo projects identified for Rwanda
UNDP project. As tea enterprises of Rwanda and
Burundi are members of EATTA such companies
will have access to all training aspects financing
offered through proposed tea project.
??
2385
Amount
(USD)
160,000
Relevance/Comments
285,000
Mini-hydro fits well into a program that “enhances
access to modern energy, especially for the rural
population with the expansion of electricity access
(in a commercially viable manner), while helping to
reduce environmental damage”. For Malawi
supporting the policy and institutional process and
the development of hrdro-based IPPs for main or
mini grid will be an area of future collaboration.
Geothermal Power Plants can be only considered for
grid connection. Geothermal will, generally
speaking, be larger in capacity where as mini-hydro
might be more appropriate for rural electrification.
Overlap in Kenya, Ethiopia, Tanzania, Uganda.
Tea factories should preferably be energy efficient
before designing mini-hydro.
In summary: Only a limited number of known pipeline entries for the energy sector in the
region covered by the EATTA is of relevance. Energy efficiency projects should always be
linked up with especially if relating to industrial and more specific tea sector industry – energy
conservation. Projects and programs that address the electricity sector relevant to the
regulatory framework aspects in a country are to be considered for “natural alliances”.
Grid connection and rural electrification projects need to be informed and consulted about
project (rural) electrification plans as well as the initiatives that may arise from such hydro
power generation and distribution potential with the tea manufacturing plants.
2) CONSULTATION, COORDINATION AND COLLABORATION BETWEEN AND
AMONG IMPLEMENTING AGENCIES, EXECUTING AGENCIES, AND THE GEF
SECRETARIAT, IF APPROPRIATE
The proposed project set up is rather straightforward with UNEP as the proposed Implementing
Agency and EATTA as the Executing Agency (see Table 05 on Management Structure). The
EATTA provides the direct linkages with all its members in the tea processing sector, while it
liaises with government agencies/ministries as well as utility companies either directly or
through the national tea sector associations (if available). The UNEP as an Implementing
Agency will join the Project Steering Committee during its project monitoring activities, will
liaise between the project management office (in EATTA) and the GEFSEC, if necessary.
In order to create a clear understanding with EATTA on its roles and responsibilities during the
various stages of project development, a summary is provided below:
31
1. Pre-PDF B period
a) Inform EATTA members about the proposed project, liaise with tea factory
management.
b) Consult EATTA members for their views on acceptability of the project and providing
feedback to UNEP;
c) Assist in the conduct of a survey on energy costs and hydro potential among all
EATTA tea producers;
d) Provide UNEP with basic information (necessary for developing the project concept
note) on its members and prospects for the development of Hydro projects;
e) Assist in seeking national GEF endorsements;
f) Provide forum for consultations between UNEP and EATTA members;
Act as project proponent and hence formally submit project concept for funding
g) Follow up of the release of required endorsement letters from each of the involved GEF
Operational Focal Points
2. PDF B period
a) Establish and maintain communication between implementing agency (UNEP) and
EATTA members;
b) Coordinate provision of information from EATTA members;
c) Organize relevant project workshops and meetings;
d) Assist in raising awareness on the proposed project among EATTA members;
e) Contribute towards elaboration of the roles of EATTA and members during the Full
Size Project period;
f) Host the project preparation team (in Mombasa and Nairobi).
g) Represent the East African Tea Manufacturing Industry in all negotiations (re. Project
design and project financing).
3.
a)
b)
c)
d)
Full Scale Project Implementation
Chair the Project Steering Committee, appoint SC members;
Liaise with members on project issues;
Host the Project Management Unit (in Mombasa and Nairobi).
Facilitate national workshops in collaboration with EATTA members /tea associations
etc.;
e) Participate and facilitate continued data collection.
32
PART II – PROJECT DEVELOPMENT PREPARATION
A – DESCRIPTION OF PROPOSED PDF-B ACTIVITIES
In a project preparatory phase a team of experts should be:
1. Establishing a partnership between EATTA and UNEP. This would entail:
a. Drafting an MOU in which the roles of each party would be defined;
b. Meeting and signing of the MOU;
c. Developing a project information sheet and disseminating to relevant parties;
d. Organizing a project implementation coordination forum (EATTA – Board and
UNEP “a pre-project Steering Committee ” operating during PDF-B phase).
2. Conducting a Scoping Exercise: Stock taking of overall potential for mini hydro project
development in the East African Tea Sector and identification of most promising sites
for future project implementation (i.e. realization of mini-hydro demonstration
projects), preferable with an associated facility for the sales of excess power to the grid
or a small scale rural electrification component.
Proposed Selection criteria:
a) Available hydro potential is sufficient to cover industrial loads, while excess
power is available for nearby commercial, social and residential loads;
b) There is a clear demand from nearby communities for electrical power as
well as a willingness to pay for such services;
c) Thermal power requirements can be covered adequately and sustainably by
wood fuel or other biomass resources;
d) Prospects for future project financing are satisfactory;
e) Prospects for project replication in the tea sector are substantial.
3. Conducting up to 15 pre-feasibility studies for prospective project development in
selected countries covered by EATTA based on the identification of prospects in the
scoping exercise (for details on the contents of a pre-feasibility study please refer to
Appendix B.);
4. Defining technical capacity needs on design, operation and maintenance of hydro
installations for EATTA and member state related tea associations and developing
appropriate training programs;
5. Assessing regulatory framework, with respect to captive power and electricity
distribution, in EATTA countries and formulate recommended activities for
implementation during Full Size Project phase in order to assure a conducive legal
environment for project development. This would focus on:
a. Water rights; (safeguarding against future water exhaustion (upstream for
irrigation purposes)
b. Environmental impact assessments3
c. Electricity distribution (licenses, IPP and tariff setting structures);
The proposed mini-hydro plants will all be so-called “Run-of-River” type of projects. There is not water impounding and no
water is actually consumed. In addition, a minimum water flow of 100l/second is commonly reserved in the natural river for
migratory species. The environmental impact of small hydro is generally considered to be minimal.
3
33
6. Designing a strategy for participation of local manufacturing industries;
7. Designing a framework for a financial mechanism to support implementation of the
mini hydro facilities with possible inclusion of a rural electrification component
(wherever relevant and feasible) in collaboration with potential funding and financing
agencies. This would entail:
a. Developing possible financing schemes including incentives;
b. Identifying potential partners nationally and internationally;
c. Marketing these schemes to potential participants;
d. Seeking consensus on viable model(s).
8. Identification of 6 mini hydro projects for development in Full Size Project
Phase.
9. Preparation of a Full Size Project Document including program of work, recommended
expertise, monitoring& evaluation plan, etc
This will include the preparation of all necessary documents for a complete feasibility study,
including detailed engineering, Small Power Purchase Agreements, Financing plan, M.O.U
between parties involved.
B – PDF Block B OUTPUTS
The main output of the PDF Block B activities will be a GEF Full Size Project document for
submission to the GEF Council and upon inclusion of a work program, a final project
document for CEO endorsement.
The document shall cover:
 A signed Memorandum of Understanding between the East African Tea Trade
Association (EATTA) and UNEP, specifying the relation between both partners and the
nature of the partnership in terms of roles, responsibilities and commitments necessary
for the implementation of a Full Size Project;
 An overview of the status of mini hydro development in EATTA member states and the
detailed potential in the tea manufacturing of each country based on the general
feasibility of mini hydro as an alternative to grid power and diesel gen-sets;
 An assessment of the environmental impact of switching from grid power and diesel
gen-sets to mini hydropower;
 Specification of a negotiated special financing plan with (multilateral) Financing
Institutions, the EATTA and the Tea Industry, considering the creation of a special
Financing Window;
 Up to 15 pre-feasibility studies for tea factories with sufficient potential for a reliable
hydropower generation as well as prospects for rural electrification, and recommend up
to 6 sites for the conduct of a full blown feasibility study, including surveys and
detailed engineering during the initial phase of Full Size Project implementation. It
should be noted that prospects for (tea-hydro) project replication vary per EATTA
country. Final selection of sites for mini-hydro development should include: prospects
for replication in the country; prospects for project financing, prospects for rural
electrification component, etc. Recommendations should be made on how rural
electrification components can be made both attractive and sustainable.
34
 An overall assessment of engineering capabilities (design) and manufacturing
capabilities in all EATTA member states for mini hydro system components resulting
in the definition of a strategy to increase local capabilities;
 An assessment of the legal framework for small scale power generation, transmission
and distribution and upstream water rights in all EATTA member states including an
analysis of (legal) prospects for project development, as basis for the recommendation
for the development of 6 proposed sites;
 Assessment of the training needs for the tea sector and civil engineering sector, design
training program to be integrated in actual mini hydro project development;
 A detailed stakeholder involvement plan;
 A project design in terms of strategic plan, detailed program management structure and
linkages with government and private sector, detailed work plan for project execution;
 A detailed Monitoring and Evaluation Plan for the Full Size Project;
 Identification/Recommendation of International agencies/firms/experts that could be
involved in the successful financing and implementation of a Full Size Project.
C – JUSTIFICATION
The proposed PDF Block B grant is essential in initiating a major shift in the Tea
Manufacturing Sector for grid power in diesel gensets to local mini hydro with the possibility
of an add-on rural electrification component. Providing technical advice at pre-feasibility and
feasibility study level, initiating a number of demo projects, supporting the creation of a
financing window for mini-hydro development in the East Africa Tea Sector are all necessary
activities that are to provide momentum for such a shift to a decentralized renewable energy
solution.
D – TIMETABLE
A complete GEF project document can be ready by December 2005 if a PDF – B will be
approved in the beginning of the year 2005. In this project document, pre-feasibility studies
for a number of sites in various countries have already been completed. These pre-feasibility
studies shall form the basis for a number of full-blown feasibility studies, the next step in the
direction of mini-hydro project development. The Full Size Project, including an additional
number of pre-feasibility study, full blown feasibility studies (including topo surveys, soil
testing and detailed design) and actual construction and installation, and blended with hands-on
training at each and every stage of mini-hydro project development in each EATTA Country
with sufficient potential, is estimated to require a period of 4 years.
E – PDF-B BUDGET
The Full Size Project Proposal needs to be prepared by 3 experts:
1) Mini-hydro expert (Engineer);
2) Economist with mini-hydro exposure;
3) General Energy Policy Development Specialist.
During the course of project preparation, experts will need to travel several times to the various
EATTA member countries for discussions with the tea sector in every country, selection of
sites for pre-feasibility studies, conduct of pre-feasibility study, and general data collection as
specified in paragraph B-PDF Block B outputs.
35
Table 07: PDF-Budget Summary
Activity
Description
Partnership
Development
UNEP-EATTA
Scoping exercise
Pre-feasibility studies
Training Needs
Assessment/Training
Program Development
Assessment Regulatory
Framework
Rural Electrification
Assessment Local
Industry
Development
Financing Mechanism
Full Size Project
Document
International Travel
Regional Air Fares
Regional Air Fares
EATTA
Daily Subsistence
Allowances (Country
visits)
Daily Subsistence
Allowances (EATTA
HQ)
Daily Subsistence
Allowance EATTA
(Country visits)
Local transport (field
visits etc.)
Workshops
Contingencies
Cost (USD)
GEF
Preparation/negotiation
MOU (Lump-sum)
10,000
Cost (USD)
EATTA & Tea
Sector
5,000
Hydro Potential Tea
Factories 10 EATTA
countries (Lump-sum)
15 sites @ USD
20,000/site
Desk study (Lump-sum)
50,000
20,000
200,000
100,000
Cost (USD)
Third Parties
20,000
Desk study, data
collection (Lump-sum)
Desk study on
ownership, modalities,
ratification, financing
(lumpsum)
Field visit, data
collection, desk study
(Lump-sum)
Design/negotiations
(lump-sum)
Analysis, selection
demo sites, work
program, experts, etc.
(Lump-sum)
3 experts x 2 missions
@ USD 2,000
10 countries x 2
missions x 3 experts @
USD 500/trip
10 countries x 2
missions x 1
representative @USD
500/trip
10 countries x 2
missions x 3 experts x 5
days @ USD 200/day
8 weeks x 3 experts @
USD 200/day
20,000
60,000
20,000
20,000
30,000
12,000
30,000
10,000
60,000
33,600
10 countries x 2
missions x 1
representative x 5 days
10 countries x 2
missions x 5 days @
USD 150/day
10 countries @ USD
5,000
10 %
Total
20,000
15,000
Grand Total
36
40,000
10,000
54,560
600,160
18,000
198,000
60,000
858,160
Notes:
1). Scoping: In the effort of preparing an overview of the mini-hydro potential relevant to meet power
requirements of the tea sector, the individual tea factories shall have to collect all basic information
(river flow data, topographic maps of water shed areas, etc);
2). Pre-feasibility Studies: The 15 pre-feasibility studies will be performed by experts but based on
information made available by the selected tea factories. Local staff will need to be made available
during field missions for site inspections and field data collection; working space will need to be made
available in or around the tea processing plant in question; local transport will need to be made
available; Tea industries to participate in the collection of existing relevant data such as topographic
maps, hydrological information, geo-technical maps, maps of existing electric power transmission and
distribution networks and any other (socio-economic) information relevant in the catchment area (s).
3). Training needs: An assessment will require collaboration with the metal industry sector;
4). Assessment of local industry: In collaboration with the (metal, electrical) industry sector to assess
capabilities (national/regional) in production of penn stocks, electro mechanic equipment e.g. (cross
flow) turbines, alternators, control panels, dummy loads;
5). International travel: Intercontinental flights;
6). Regional travel: from EATTA Headquarters to and from EATTA member states;
7). Missions: Arbitrarily set in 2x2 weeks per country for data collection excludes execution of prefeasibility studies;
8). Local transport: Incidental hiring of vehicles, in general to be provided by tea factories, National Tea
Associations, etc;
9). Workshops (in PDF- phase), single event in every country for discussions with the Tea Sector,
Engineering firms, relevant government agencies etc.
10). Rural Electrification: As the possibility of rural electrification, piggy backed on commercial shall hydro
power development would fit into the policies/strategies of the EUEI, there is a concrete interest of the
German GTZ to collaborate as PDF-B stage in developing electrification models.
37
APPENDICES
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Appendix G
Appendix H
Appendix I
A Global Indication of Development Costs of Micro Hydro Power
Plants
Typical project Development Cycle in Small Hydro Project
Development
Mission Report
Management Committee Meeting
Preliminary Results Survey Tea Factories.
Summary Hydro Mission KTDA/ADEME, Northern Aberdares,
Kenya.
EATTA Status, Management Structure and Small Hydro
Programme Implementation.
EATTA Minutes of Meeting Nov. 26, 2004
Confirmation of Interest
38
APPENDIX A
A (global) indication of Development Costs of Micro Hydropower Plants:
Costs per kW installed capacity:
Between USD 1,000 – USD 1,500 low (very attractive site)
Between USD 1,500 – USD 2,000 medium (average site)
Between USD 2,000 – USD 3,000 high (complicated site)
 Civil works comprise about 50 % of the development costs. Main components are intake
and sand trap, headrace and penstock. All civil works are site specific and depending on
whether the scheme is high or low head;
 Electro-Mechanical equipment is about 35 % of the total development cost with as main
components the turbine ( 10 %), generation ( 10 %) and control system and switchgear
( 15 %);
 Engineering, planning and design etc. will add up to 15 % of the development costs.
 Transmission is not included as length of transmission lines varies.

Source: JAMPS (SECO/ENTEC), Jakarta 2004
39
APPENDIX B:
Typical Project Development Cycle in Small Hydro Project Development
As hydro project development is a costly affair, the approach is usually phased in order to
avoid unnecessary expenses, allowing decisions to be made at various stages.
A) Scoping Hydro Potential: A quick assessment of hydro potential in the area.
B) Pre-feasibility study:
1) Data collection on all relevant data re. topography, hydrological data (rainfall, water
flows), geo-technical information, map of catchment area, etc;
2) Assessment of loads (equipment, production cycles, additional energy demand,
including assessment of potential energy savings in equipment and processes)
3) Assessment of monthly/yearly energy consumption;
4) Assessment of nearby electrical loads (survey);
5) Overall demand analysis (current load and load forecasts);
6) Assessment of hydro potential and development cost/ including technical
assessment and sizing, costs and optimization of system capacity and production;
7) Assessment of required legal and financial requirement
8) Full pre-feasibility document covering all economic, social, environmental
technical and financial aspects on potential mini hydropower project development
including rural electrification option.
C) Feasibility Study:
Should the pre-feasibility be positive and project financing can be secured, the actual
feasibility study may commence. After topographic survey and soil tests, the detailed design
can be engineered. In most cases an Environmental Impact Assessment is required. Note:
Environmental Impacts of “Run-of-River” type of Mini Hydro Power Plants is generally
limited. Only now actual project costs and kWh cost for energy supplied can be determined,
specifications for civil works and electro mechanical equipment can be drafted and tender
documents be prepared. As this exercise is very site specific, and therefore time consuming, it
is a rather expensive component of project development, amounting to some 15 % of overall
project costs.
D) Actual Construction, Installation and Commissioning
E) Operation and Maintenance.
40
APPENDIX C:
MISSION REPORT
DISTRIBUTI NAME (S) Njeri Wamukonya, Energy Program Officer, DPDL
ON:
PERIOD: FROM 30 July - 1 August 2004 (INCL. TRAVEL DATES)
Executive
Director
Deputy
Executive
Director
Director,
Director GEF,
Director
DPDL,
Deputy
Director,
DPDL,
DPDL POs
TITLE OF MEETING:
Meeting of the EATTA Board members
INSTITUTION (S): EATTA
VENUE: EATTA office, Mombasa
MAIN PERSON (S) CONTACTED: Hadija Shakombo, Administrative secretary,
EATTA.
OBJECTIVES:
To present a potential GEF project proposal to the project proponent,
EATTA Board members.
TRAVEL AUTHORIZATION SERIAL NUMBER: 18708 (N. WAMUKONYA)
BRIEF SUMMARY
Objectives of the meeting
The objective of the mission was to provide advice on the EATTA project proposal to the
board members of the institution.. The project aims to improve energy supply security and
lower tea production costs by
reducing dependency on bunker fuels which will be substituted with sustainably grown wood
fuel or biomass residues shifting from grid power to hydropower
and extending electricity services to communities within close proximity to factory.
.
Participants:
The meeting was attended by the EATTA board members;
Main outcomes
The project idea was originally discussed between the EATTA administrative secretary, Hadija
Shakombo, during an informal meeting held in Nairobi with Peerke De Bakker and N.
Wamukonya (NW). Hadija Shakombo thereafter informed the members of its board and sought
their feedback. The board indicated interest in the project and requested for more details prior
to making formal commitments. A basic draft concept note was then submitted to the
members. Given that this would be the first GEF project EATTA would be undertaking, it was
deemed important that EATTA was better informed about GEF modalities. In addition it was
noted that it was important to avoid misconceptions on the institutional set-up and overall roles
and responsibilities of EATTA and UNEP. It is on this basis that NW was invited to present
the proposal to the EATTA Board members on 30 July 2004, in Mombasa.
The presentation (attached as appendix A) was made to the board members. Emphasis was
made on the need for EATTA and the interested tea factories to indicate commitment. The
41
project process was elaborated and the role of EATTA and its members at different phases
highlighted; The Chair of the board requested for members initial reactions.
Overall the board members demonstrated keen interest in the project and clearly indicated the
wish to participate. They acknowledged the value of such a project to the tea industry.
Individual members later privately voiced their interest and requested that presentation be sent
to them so they can use it in informing their constituencies about the project. (EATTA board
members represent groups of tea producers and marketers). KTDA representative specifically
requested NW to make the same presentation to relevant KTDA members as soon as possible;
The board members promised to provide formal response on EATTA commitment to the
project ASAP. Regardless, they support the project idea and are eager to see it to fruition.
Recommendations:
UNEP should assist EATTA by providing advice and input on further development of the
project concept. In so doing, UNEP should continue to work closely with the EATTA
secretariat
UNEP should assist in making presentations on the project to any interested tea producer
CLASSIFICATION
[] CONFIDENTIAL
SIGNATURE (S)
SUPERVISOR'S SIGNATURE
[] RESTRICTED
Annex 1: Presentation made to the EATTA Board members
42
APPENDIX D:
MANAGEMENT COMMITTEE MEETING
30th July 2004
EATTA Secretariat Boardroom
MINUTES
Present:
Member Company
James Finlay (K) Ltd.
Lipton Ltd.
Brooke Bond Kenya/Lipton Ltd.
Stansand (A) Ltd.
Eastern Produce Kenya Ltd.
Chai Warehousing Ltd.
Van Rees bv
Combrok Ltd.
Kenya Tea Development Agency
East Usambara Tea Co
Union Tea Brokers Ltd.
Global Tea & Commodities
James Finlay Mombasa
Representative
Mr. Nelson Orgut (Chair)
Mr. David Mugambi
Mr. Anthony Laurent
Mr. G. Ngugi Waireri
Mr. H. Kalyan
Mr. Simon Gikang’a
Mr. Njau Kiarie
Mr. Joseph Kamau
Mr. Eric Kimani
Mr. Lalit Khatri (representing TAT)
Mr. Jacob Kamau Kahiu
Mr. Peter Kimanga
Mr. Nicholas Munyi
Co-opted Members:
Tea Board of Kenya
KETEPA Ltd.
Kenya Tea Dev. Agency Ltd.
Mr. Tom C. Muchura
Mr. Shadrack.M. Wasike
Mr. Stephen K. Nkanata
Mr. Lerionka S. Tiampati
Mr. Julius N. Ethang’atha
EATTA Staff:
Ms. Hadija Shakombo
Apologies:
Mr. Norman Wilson
Mr. Talal Balala
Mr. Laurie Davies (UTASSO representative)
Note: only relevant minutes have been included in this section.
Minute 2335: ANY OTHER BUSINESS
Presentation of Project titled: Greening the Tea Industry by UNEP
43
(A soft copy was later e-mailed to all members of the management committee)
UNEP’s Dr. Njeri Wamukonya made a Microsoft power point presentation to an attentive
audience.
The presentation addressed the EATTA project concept, rationale for UNEP’s involvement,
GEF’s involvement in such a project, GEF financing levels for such projects, GEF’s operating
principles, EATTA – Project institutional set up, the project process and activities and the GEF
project submission process.
The Project aims to improve energy supply security and lower tea production costs by reducing
dependency on bunker fuels and shifting from grid power to hydropower.
Dr. Wamukonya concluded with an outline of what was expected/required for the project to
happen:
A clear indication of interest and willingness by board members of EATTA to show concrete
commitments on the project.
Confirmed interest in the project by EATTA members.
Ultimately, individual tea factories to commit funding for investment.
UNEP and EATTA to develop proposal in collaboration.
Member’s Comments:
Mr. Eric Kimani, Managing Director KTDA responded very positively to the proposed project,
indicating that KTDA had plans to implement a similar project. Advertisements inviting for
expression of interest to undertake feasibility studies received good responses.
Mr. Waireri considered it a good project. The tea industry was no longer a cash rich industry.
Profits in the industry were made largely from savings obtained. Power usage was one area
where significant savings were possible.
Mr. Tony Laurent sought to establish a link with Unilever Tea Kenya staff in Kericho,
responsible for a similar project. Mr. Lalit Khatri, current Chairman Tea Association of
Tanzania inquired about the possibility of UNEP working directly with members in Tanzania.
The Chairman, Mr. Nelson Orgut thanked Dr. Wamukonya for the presentation and looked
forward to the realization of this project.
There being no other business, the meeting was concluded at 1.10 p.m.
Signed_________________________________________ Date: _________________
Chairman
44
EAST AFRICAN TEA TRADE ASSOCIATION
Tea Trade Centre, Nyerere Avenue
P.O. Box 85174, Mombasa, KENYA
Tel: 254 11 315687/315245
Fax: 254 11 225823
E-Mail: [email protected]
Website: www.eatta.com
MANAGEMENT COMMITTEE MEETING
8th October 2004
EATTA Secretariat Boardroom
MINUTES
Present:
Member Company
James Finlay (K) Ltd.
Brooke Bond Kenya/Lipton Ltd.
Eastern Produce Kenya Ltd.
Chai Warehousing Ltd.
Van Rees bv
Combrok Ltd.
Kenya Tea Development Agency
East Usambara Tea Co
Union Tea Brokers Ltd.
Global Tea & Commodities
James Finlay Mombasa
Tanjal Investments Ltd.
Uganda Tea Association
Representative
Mr. Nelson Orgut (Chair)
Mr. Anthony Laurent
Mr. Danton Vorster
Mr. Simon Gikang’a
Mr. Njau Kiarie
Mr. Joseph Kamau
Mr. Eric Kimani
Mr. Lalit Khatri (representing TAT)
Mr. Jacob Kamau Kahiu
Mr. Peter Kimanga
Mr. Nicholas Munyi
Mr. Talal Balala
Mr. Ram Mohan (representing UTASSO)
Co-opted Members:
Tea Board of Kenya
Mr. Stephen K. Nkanata
Kenya Tea Dev. Agency Ltd.
Mr. Julius N. Ethang’atha
Mr. Tom C. Muchura (also representing ATB)
Mr. Shadrack.M. Wasike
EATTA Staff:
Ms. Hadija Shakombo
Apologies:
45
Mr. Norman Wilson
Mr. G. Ngugi Waireri
Mr. David Mugambi
Mr. Lerionka Tiampati
Mr. Laurie Davies (UTASSO representative)
8.
UNEP/EATTA hydropower project
The chairman gave a brief report of his meeting with UNEP’s Mr. Peerke Bakker to discuss
progress to date on the project. A draft project proposal was submitted by EATTA to its board
membersand will be copied to members for review and feedback. He re-affirmed EATTA’s
support for this project. An MOU with UNEP will be signed, while ensuring that EATTA does
not assume liabilities/financial obligations that it cannot shoulder.
Mr. Eric Kimani added that KTDA had opened negotiations with UNEP on the same project.
Mr. Khatri reported that Tanzania producers would submit completed questionnaires in due
course.
Mr. Mohan made reference to a somewhat similar project in Uganda – Muzizi Hydropower
Project, where groundwork has already been done. Madhvani group of companies had
successfully undertaken self-generation of hydropower, although not in an environmentally
friendly manner. The proposed EATTA-UNEP project should take into consideration the fact
that financial liability for such an undertaking should be the responsibility of participating
companies and effort to structure an entity for implementation that accommodated this should
be made. He was also concerned that where a factory was situated far from the point of
hydropower generation, the cost of transmission may be significantly higher than that for
generating the power.
These concerns will be addressed in the project proposal, he was assured. Further discussion
will take place during the EATTA executive visit in Uganda.
TBK issues/updates
Mr. Nkanata discussed the following issues:
Overproduction
Kenya tea production this year is expected to exceed last years by 24% at 320 million kilos.
86 million kilos of unsold Kenya tea was carried forward from 2003 as stocks. Tea growing
was now taking place in marginal areas such as Transmara District. Yet consumption was less
of what was grown and farmers were asking for higher prices.
With so much tea around, improved prices would be difficult to achieve. The board
recommended re-introduction of the tea-planting license, removed 5 years ago when the
industry was liberalized. Mr. Nkanata asked for support from the Industry in addressing this
issue.
46
APPENDIX E:
PRELIMINARY RESULTS SURVEY TEA FACTORIES.
As of today, UNEP has received replies from 106 tea factories in the Eastern Africa Region,
see attached list. There are no definite records with the East African Tea Trade Association, as
some EATTA members are associations and therefore represent more than one tea factory but
it is assumed that there are around 150 tea factories in the region. Some first observations:
1) Of the 106 tea factories it appears that 74 factories are aware of existing hydro
potential at locations within 10 km away from the tea processing plant. In 32 cases
there is either no hydro potential, or the hydro potential is not (yet) known).
2) Fuel to meet Thermal Energy needs of tea factories: It is obvious that throughout the
region tea factories generally grow their own wood fuel, generally considered to be a
sustainable practice. In a number of cases wood is also purchased either from tea
farmers (factories often distribute eucalyptus seedlings) or from third parties.
Purchases especially from third parties are considered less sustainable (renewable).
3) With an odd exception, it appears that only factories managed by the Kenyan Tea
Development Agency (KTDA) use fossil fuel (furnace oil) to meet thermal energy
requirements of the tea factory. In Kenya there are around 55 KTDA tea factories that
are each cooperatively owned by the tea farmers.
Country
Tea Factory
Quest.
No.
Company
Fuel
Hydro.
Pot
Known
dist.(Km)
Ethiopia
Burundi
OTB
OTB
99
F + Wo +
Wp
Kenya
Nyamache Tea Factory
Litein
Kathangariri Tea Factory
Ikumbi Tea Factory Co.
Imenti
Kapset
Theta
Keritor
Nandi
Iriaini Tea Factory
Nyansiongo
Ngere Tea Factory
Ragati
Kymulot
Mara Mara
Changana
Kitumbe
Saosa
Chomogonday
Kiru Tea Factory
Aroket
Mettarora
Maramba
KTDA
KTDA
KTDA
KTDA
KTDA
Kapset Tea Factory Limited
KTDA
Sasini Tea & Coffee Limited
Nandi Tea Estates
Iriani Tea Factory Limited
KTDA
KTDA
KTDA
James Finlay (Kenya) Limited
James Finlay (Kenya) Limited
James Finlay (Kenya) Limited
James Finlay (Kenya) Limited
James Finlay (Kenya) Limited
James Finlay (Kenya) Limited
KTDA
Sotik Tea
Sotik Highlands
Maramba
40
39
38
43
36
35
34
33
31
29
28
26
25
24
23
22
21
20
19
18
17
16
15
F + Wp
F + Wp
F
F
F + Wp
F + Wp+ Wo
F + Wp
Wo
Wo
Wp
F + Wp
F
F + Wp
Wo
Wo
Wo
Wo
Wo
Wo
Wo
Wo
Wo
Wo
47
?
10
10
5+10
3
4
3
?
?
?
?
3+5
10
?
3+5
3+5
3+5
3+5
3+5
3+5
20
3
5
?
Country
Tea Factory
Company
Quest.
No.
Fuel
Changoi
Chagaik
Tagabi
Williamson Tea (K) Limited
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
14
8
7
Wo
Wo
Wo
Kericho
Kimari
Kimugu
Koruma
Mabroukie
Jamji
Kanyenyaini
Kipkebi
Nduti
Gathuthi Tea Factory
Siret
6
5
4
3
2
1
44
45
61
60
62
Wo
Wo
Wo
Wo
Wo
Wo
F + Wp
Wo
F
Wp
Wo
63
Wo
10
64
Wo
1
65
66
Wo
Wo
?
10
67
Wo
?
Chemoni
Tinderet
Karirana
Kaimosi
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
Unilever Tea Kenya Limited
KTDA
Sasini Tea & Coffee Limited
KTDA
KTDA
Kakuzi Limited
Eastern Produce Kenya
Limited
Eastern Produce Kenya
Limited
Eastern Produce Kenya
Limited
Kibwari Limited
Eastern Produce Kenya
Limited
Eastern Produce Kenya
Limited
Williamson Tea (K) Limited
Karirana
Williamson Tea (K) Limited
68
72
73
74
Wo
Wo
Wo + Wp
Wo
5
10
1+3
?
Kiegoi
Kapchorua
Kaisugu
Kiamokama
Githongo
Kangaita
Mogogosiek
Rukiriri
Nidma
Kinoro
Kionyo
Gacharage
KTDA
Kapchorua Tea
Kaisugu Ltd.
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
75
76
78
80
81
82
83
84
85
86
87
?
?
20
5 + 10
5 + 10
5 + 10
3 + 5 + 10
1 + 10
10
3
5 + 10
?
Githambo
Weru
Kagwe
Kerugoya
Chebut
Kambaa
Kaptatet
Chinga
Gitugi
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
KTDA
Tea Factory
Company
89
90
91
92
93
94
95
96
98
Quest.
No.
F + Wp
Wo
Wo
F + Wp
F + Wp
F + Wp
F + Wp
F + Wp
F + Wp
F + Wp
F + Wp
F + Wp
F + Wo +
Wp
F + Wp
F + Wp
F + Wp
Wo + Wp
F + Wp
F + Wp
F + Wo
F + Wp
Njunu
KTDA
100
Savani
Kapsumbeiwa
Kipkoimet
Kibwari
Kepchomo
Country
48
88
Fuel
F + Wp
Hydro.
Pot
5+10
10
1+3+5+10
3+5+10
3+5
10
10
?
1+3+10
5+10
?
5
10
10
?
5
1
3 + 5 + 10
10
5
10
1
3 + 5 + 10
Hydro.
Pot
3
Tegat
Sanganyi
KTDA
KTDA
Kebirigo
KTDA
106
101
F + Wp
F + Wp
3+5
?
102
F + Wp
10
KTDA
Eastern Produce Malawi
Malawi
Limbuli
Limited
Eastern Produce Malawi
Mini-mini
Limited
Eastern Produce Malawi
Ruo
Limited
Makandi Tea and Coffee
Chinsunga
Estates Ltd
Eastern Produce Malawi
Esperanza
Limited
Eastern Produce Malawi
Chisambo
Limited
Eastern Produce Malawi
Lauderdale
Limited
Eastern Produce Malawi
Gotha
Limited
Eastern Produce Malawi
Kasembereka
Limited
Eastern Produce Malawi
Makwasa
Limited
Eastern Produce Malawi
Mianga
Limited
Mozambique UP-5
SDZ-CHA-SARAL
Chazeiras de Mocambique Chazeiras de Mocambique
LDA
LDA
103
F + Wp
5
43
Wo
5+10
42
Wo
5
41
Wo
10
10
Wo + Wp
46
Wo
10
47
Wo
3+5+10
48
Wo
3+5
49
Wo
?
50
Wo
?
51
Wo
?
52
27
Wo
Wo
?
3
13
Wo
10
Rwanda
Cyohoha-Rukert
Sorwathe s.a.v.l
32
Wo + Wp
10
Tanzania
Itona
Kwamkoro
Katumba
Mufindi Tea Company Limited 30
Amani-Muheza
9
Wakulima Tea Co Ltd.
77
Wo + Wp
Wo + Wp
Wp
50
10
5
Kibena
Kibena Tea Ltd.
77
Wp
10
Herkulu
Bombay Burmah
97
Wo
?
Kijura
Mpanga Growers
Wo + Wp
Wo + Wp
30-40
?
Wo + Wp
?
Kayonza Growers
Mwenge
Muzizi
Kiko
Bugambe
Ankole
Kiamara
Mityana
Kijura Tea Company
12
Mpanga Growers Tea Factory 11
Uganda Tea Development
Agency
59
Uganda Tea Development
Agency
58
James Finlay (Uganda) Limited 57
James Finlay (Uganda) Limited 53
James Finlay (Uganda) Limited 56
James Finlay (Uganda) Limited 55
James Finlay (Uganda) Limited 54
TAMTECO
69
TAMTECO
70
Wo + Wp
Wo + Wp
Wo + Wp
Wo + Wp
Wo + Wp
Wo + Wp
Wo + Wp
Wp
10
50
3?
?
15
?
?
?
Toro/Kahuna
TAMTECO
Wo + Wp
Tea Factory
Company
?
Hydro.
Pot
Kapkoros
Uganda
Igara Growers
Country
71
Quest.
No.
Mabale
104
Zimbabwe
49
Fuel
F + Wo +
Wp
?
1+3+5+
10
Key
Wo – Wood Own
Wp – Wood Purchase
? – Hydro Potential not available or not known
50
APPENDIX F:
SUMMARY HYDRO MISSION KTDA/ADEME, NORTHERN ABERDARES, KENYA.
PRE-FEASIBILITY STUDY : SMALL HYDRO DEVELOPMENT IN TEA CATCHMENT
AREAS OF KENYA
A team of experts from an international consultancy firm based in France, Innovation Energie
Développement, IED, in collaboration with the Kenyan Tea Development Authority (KTDA)
is working towards the identification of small hydro sites in tea catchment areas of Kenya.
The overall objectives are to tap local hydrological energy resources so as to increase the
availability and reliability of power and reduce costs for tea factories which are members to the
KTDA management scheme, and to ensure increased access to electricity services to
communities residing in the proximity of the Tea Factories.
The work will act as a pre-feasibility study, it will comprise of the following main components:
technical pre-feasibility
demand analysis and load forecast (tea factories, surrounding villages, commercial activities,
public services and households)
financial feasibility and
project packaging, including discussions with CDCF
The project as a first
looking at a cluster of 8
factories and their tea
areas situated in the
Aberdares region.
phase is
of Tea
catchment
eastern
Githambo,
Gatunguru, Chinga,
Gitugi and Gathuthi
fall within two zonal
3 and 4) as categorized
services. This cluster of
is home to a total of
growers – equivalent to
approximate population
Kanyenyaini,
Kiru, Iriaini,
Tea Factories
offices (Zone
by KTDA
Tea Factories
50,500 tea
an
of 252,500.
This brief, provides an
the findings to date,
in terms of the
viability.
indication of
specifically
technical
These findings result
day mission conducted
18th to 28th October
team of 4 experts.
from a 10
between the
2004 by a
Technical Pre-Feasibility
51
The technical pre-feasibility study began by an in depth analysis of maps, hydrological and
meteo data so as to pre-identify potential sites given the location of the factories location and
the natural potential of each rivers (mainly : head, discharge, FDC and geographical
localization).
In proximity of the 8 Factories the hydrologic characteristics of the rivers, the topographic
characteristics, the general lay-out (grid, roads), the natural risks and the main geological
features were noted and following the global MHP schemes lay-out, the technical sizing, the
potential power and yearly output, the technical feasibility, the implementation financial
estimations and the optimization of each system were assessed.
The mission focused on nine rivers out of more than fifteen between Gathuthi (the furthest
northern site) and Githambo (the furthest southern site). Amongst these, 7 MHP schemes have
been identified with a significant potential shared between 5 rivers.
The 7 sites range between 0.15 to 2.5 MW, totaling an installed capacity of more than 10 MW,
the local potential for MHP development is considered to be extremely optimistic.
Watershed areas for these rivers vary from 32 up to 117 km² and are characterized by smooth
flow duration curves throughout the year. In addition, the geological and topographic
conditions make the sites accessible posing little problem for implementation. The only
complication identified is the need for long canals, that would run on tea growers land, due to
the small slope gradient of rivers.
To conclude, the relative homogeneity in the potential sites, make it feasible to supply the 8 tea
factories and their surrounding communities, both considering a local private grid or a
connection to the existing KPLC grid.
The final report to this first phase is scheduled for December 2004.
52
APPENDIX G
EATTA Status, Management Structure and Small Hydro Programme Implementation
East Africa Tea Trade Association is a voluntary membership organization that brings together
Tea Producers, Buyers (Exporters), Brokers, Packers and Warehousemen, affording them a
disciplined environment in which to interact commercially, and to promote the best interests of
the trade in Africa. EATTA has been in operation for over 47 years representing tea
stakeholders from Kenya, Uganda, Tanzania, Ethiopia, Rwanda, Burundi, The Democratic
Republic of Congo, Malawi, Mozambique, Madagascar, Zambia and Zimbabwe. Tea Producer
members are located in countries that produce tea in the region whereas Tea Buyers, Brokers,
Packers and Warehousemen all operate from the port of Mombasa, where the Association is
based. In some cases individual tea manufacturers are EATTA members, in other cases entire
groups or associations are registered as single members. Example: In Kenya, the KTDA –
Kenya Tea Development Agency – with 56 tea factories is classified as one single member.
Current membership consists of about 280 member companies, with linkages to other key subsectors of the economy such as shipping, overland transport, packaging and banking.
The tea industry in the region relies on the East African Tea Trade Association to:



Market its tea to the rest of the world through the Mombasa tea auction.
Facilitate effective access to market and other relevant industry information
Promote industry interests through proactive lobbying and advocacy
measures.
The primary functions of the Association are:
o To promote the interests of the tea trade in Africa.
o To foster closer working relations among members of the tea industry.
o To establish facilities for the orderly sale of teas of African origin in a
centralized format, at the international auction in Mombasa.
o To facilitate the settlement of disputes within the trade.
o To collect and circulate statistics and trade information, and to maintain such
records as may be of assistance to members in the conduct of their business
affairs.
o To act as a link, between the trade and government and related bodies.
The association has had remarkable successes in the past especially in marketing of teas
through the Mombasa auction. The Mombasa auction center, established and managed by the
EATTA is a success story. Unprecedented growth by over 300% in the last 20 years; Overtook
Colombo as the world’s largest tea auction center in 2004; Efficient auction operation and
governance by EATTA; Good perception of service and delivery standards; Teas offered
include those from several other African countries.
Mombasa is the only auction center in the world trading in straight-line teas originating from
more than one country. Major tea producing and consuming countries focus attention on the
weekly auction activities in Mombasa, which assist them to gauge market trends and to create
benchmarks for international tea prices.
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The affairs of the Association are monitored and directed by a Management Committee, which
meets bimonthly. The committee consists of six producer representatives, six buyers, three
brokers and one warehouseman, formally elected each year at the Annual General Meeting.
The Management Committee elects its Chairman and Vice Chairman, co-opts additional
members and appoints sub-committees as it may deem fit. Among the co-opted members is
the Managing Director of the Kenya Tea Board. The Uganda Tea Association and Tea
Association of Tanzania are each represented on the Management Committee.
The functions of the Association are coordinated by a Secretariat, which operates on funds
raised from members’ entrance fees and annual subscriptions. The Secretariat, which also
houses the auction rooms, is based at the Tea Trade Center on Nyerere Avenue, Mombasa.
East Africa Tea Trade Association has not suffered any material adverse change in its business
prospects or condition, nor, has it incurred any substantial or unusual loss or liability. East
Africa Tea Trade Association is not engaged in or, threatened by any litigation, arbitration or
administrative proceeding, as plaintiff or defendant, the outcome of which might materially
affect its business or financial position.
Up to this day, the EATTA has not (even) been engaged in any project that bears any similarity
with the proposed “Greening the Tea Industry in East Africa”. It is proposed that UNEP (as
Implementing Agency) collaborates with the EATTA (as Executing Agency) in the realization
of the proposed tea factory based hydro project. A Steering Committee shall consist of
representatives of the tea manufacturers, as represented in the EATTA – Board, but only of
those countries that actually will participate in the execution of the Full Size Projects (actual
demo project realized).
EATTA shall host a Project Management Office, in which (international) experts shall work on
all the tasks defined, creating an enabling environment for mini-hydro development in tea
factories, rural electrification, hydro pre-feasibility and feasibility studies including detailed
design, training of technical staff in Civil Engineering and Electrical Engineering sector as well
as tea factory technical staff and liaise with Ministry of Energy /Industry etc. and national
utilities. After the PDF-B a number of tea factories shall be invited for actual demo project
mini hydro power plant implementation. In that moment these shall be direct linkages between
the EATTA Project Management Office and the individual tea factory. Hands-on training
sessions shall be considered with the entire national tea sector as well as civil
engineering/electrical engineering sectors (industry associations, consulting/engineering firms
etc). The PDF-B experts are invited to design these procedures and linkages in detail.
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APPENDIX H
EATTA MINUTES OF MEETING NOVEMBER 26, 2004
EAST AFRICAN TEA TRADE ASSOCIATION
Tea Trade Centre, Nyerere Avenue
P.O. Box 85174, Mombasa, KENYA
Tel: 254 11 315687/315245
Fax: 254 11 225823
E-Mail: [email protected]
Website: www.eatta.com
MANAGEMENT COMMITTEE MEETING
26th November 2004
EATTA Secretariat Boardroom
MINUTES
Present:
Member Company
James Finlay (K) Ltd.
Unilever Tea Kenya Ltd.
‘’
‘’
‘’
Eastern Produce Kenya Ltd.
Stansand (A) Ltd.
Chai Warehousing Ltd.
Combrok Ltd.
Kenya Tea Development Agency
‘’
‘’
‘’
‘’
East Usambara Tea Co
Union Tea Brokers Ltd.
Global Tea & Commodities
James Finlay Mombasa
Africa Tea Brokers Ltd.
Representative
Mr. Nelson Orgut (Chair)
Mr. Anthony Laurent
Mr. David Mugambi
Mr. Danton Vorster
Mr. G. Ngugi Waireri
Mr. Simon Gikang’a
Mr. Allan Njoroge
Mr. Eric Kimani
Mr. Samuel Karima
Mr. Lalit Khatri (representing TAT)
Mr. Jacob Kamau Kahiu
Mr. Peter Kimanga
Mr. Nicholas Munyi
Mr. Norman Wilson
Co-opted Members:
Tea Board of Kenya
Mr. Tom C. Muchura
Mr. Lerionka Tiampati
Mr. Shadrack.M. Wasike
Mr. Stephen K. Nkanata
Ketepa Ltd.
EATTA Staff:
Ms. Hadija Shakombo
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Absent with Regret:
Mr. Njau Kiarie
Mr. Laurie Davies (UTASSO representative)
Minute 2345: UNEP/EATTA HYDROPOWER PROJECT
Mr. Orgut confirmed that members had received the summary and the project document in full.
He re-affirmed the Management Committee’s support for the proposed project. The following
points were made to progress the proposed project proposal :
 That a letter shall be sent to UNEP, confirming EATTA’s support and
willingness to collaborate with UNEP/GEF in implementation of this project.
 That a meeting with UNEP shall be convened as soon as possible to discuss in
detail and come to an agreement regarding terms of reference, plan of work,
financial obligations and other responsibilities for all involved.
Signed_________________________________________ Date: _________________
Chairman
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APPENDIX I
CONFIRMATION OF INTEREST
EAST AFRICAN TEA TRADE ASSOCIATION
Tea Trade Centre, Nyerere Avenue
P.O. Box 85174, Mombasa, KENYA
Tel: 254 11 315687/315245
Fax: 254 11 225823
E-Mail: [email protected]
Website: www.eatta.com
20th December 2004
Mr. Peerke Bakker
Programme Officer Energy
UNEP/DGEF
P.O. Box 30552
Nairobi.
Dear Sir,
Confirmation of Interest
Following the presentation of the “Greening the Tea Industry” project concept by Dr. Njeri
Wamukonya on July 30th 2004 and your submission of the draft project proposal, the EATTA
Management Committee further discussed this project at subsequent meetings held in October
and November 2004.
The Management Committee, which represents tea buyers/exporters, packers, warehouses,
brokers and tea producers in Kenya, Tanzania, Uganda and other countries in this region fully
endorsed the project proposal. All EATTA Producer members were informed and an indication
of their interest to participate obtained through the responses to the baseline information
questionnaires submitted to you.
Apart from the positive impact on the environment, this project offers tea producers an
opportunity for significant savings on cost of production. I am therefore writing to confirm
EATTA’s support and our willingness to partner with UNEP in the implementation of this
project.
At the EATTA Management Committee meeting held on 26th November 2004, it was agreed
that a meeting with UNEP should be convened as soon as possible to discuss in detail, terms of
reference for the partnership, plan of work, financial obligations to the EATTA and other
related responsibilities.
Yours Sincerely,
For: East African Tea Trade Association
David Mugambi
Vice-Chairman, EATTA
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