The challenges facing the electricity supply sector are mainly inadequate generation capacity arising out of insufficient investment in power generation and its dependence on hydro for 50% of the existing capacity. The sector has had to resort to expensive quick fixes like Medium Speed

Diesel (MSD) plants running on Heavy Fuel Oil (HFO) and High Speed Diesel plants running on Automotive Gas Oil (AGO). Electricity is therefore expensive as these plants currently contribute to nearly 40% of the effective capacity with cost of energy generated from these plants ranging from US$ cents 26 – 36 per unit. Their contribution increases during dry hydrology, making electricity even more expensive.

The current effective power generation capacity in the country is 1664 MW. The make up this capacity in MW is hydro 770, geothermal 241, thermal 622, co-generation 26, and wind 5.1. The monitored demand which is considered suppressed largely due to transmission and distribution

system weaknesses, stands at about 1,357 MW while the unsuppressed demand is estimated as 1700 MW, thus depicting a shortfall of 536 MW, after providing for a 30% reserve margin recommended by the National Economic and Social Council (NESC).This demand-supply imbalance has hitherto contributed to regular power rationing, particularly during dry seasons.

This undesirable situation has persisted since 2006 and there is therefore need to correct it on a fast track basis.