Lessons Kenya can pick from Russia in gas energy switch

Friday, July 28th, 2023 08:00 | By
Journalists and energy experts from Africa at Kalinki’s home in Voksresnskoe village. PHOTO/Gazprom
Journalists and energy experts from Africa at Kalinki’s home in Voksresnskoe village. PHOTO/Gazprom

Sergey Kalinkin’s home in Leningradskaya Oblast, a suburb of St Petersburg, is in the last mile of the collective national gas pipeline system that starts its journey in the gas fields of Dobycha Nadym in the Arctic Circle.

Until two years ago, he used wood to fire the boiler that kept the ground floor of his house warm during the harsh Russian winters. This would keep him going for about 12 hours.

“Smoke from my neighbours’ houses in our Voskresenskoe village would come into our home through the chimney,” says Kalinkin, standing in the garden outside his house whose walls are painted a mild shade of purple.

Visiting his children in Moscow was out of his ‘to do’ list in the cold season because he had to be home to light the coal stoves every morning and every evening.

This was the only way he could keep his house warm. Now, he just needs to switch on the gas that Gazprom piped into his house in 2021.

“I can now visit my children and grandchildren. I am no longer linked to the house,” he says, implying that he and his wife are free to travel because all they need to do is switch on the gas, set the temperature they want and the gas-fired boiler will keep the house warm until they return, with no risk of fire or related hazards.

According to Busin Vyacheslav, one of the senior regional officials of Gazprom in St Petersburg, 500 settlements like the rural Voskresenskoe village have been connected to the natural gas system and use it for cooking and heating.

And over 70 per cent of homes in the greater St Petersburg have been connected to the system.
“In winter, a small household pays about 200 rubles (approximately 20 dollar) a month,” says Vyacheslav. “In summer, it goes down to 50 rubles (about five dollars).”

Kalinki’s household spends about 10 times more because there are numerous times when his family of eight gathers in his home for re-unions.

Costs go up in winter due to the cold and reduce in summer because homes do not require heating in the warm season, which, in some years, can be as short as three months.

Besides being convenient, Kalinki says gas is cleaner compared to wood or coal, which his neighbours used before they too got connected.
“The quality of my life has improved,” says the retiree. “My house is now cleaner.”

It has taken technology for people like Kalinki to get to where they are today. But this did not happen by accident. Indeed, the history of technology and industrialisation in Russia goes back to the very foundation of the modern Russian society during the reign of Peter the Great, its first Tsar and later Emperor.

Although an autocrat, he challenged scientists and artists to come up with great innovation and was influential in the setting up of the Russian Academy of Sciences, the St Petersburg State University and other institutions through which he set the tone for Russia’s industrial growth.
But he was not just a ruler.

Having studied in the Netherlands, he had mastered at least 12 crafts, including carpentry, and was involved in diverse occupations, including the making of industrial machinery — some of which are on display in the Hermitage Museum in St Petersburg.

Over the centuries, subsequent leaders and business leaders have built on this foundation to drive the innovation that has made the supply of gas to nearly all of the vast country possible.

One of them was Vaily Poletika, the founder of Nevsky Zavod, the company that manufactures turbines that pump gas through the over 7,000km of pipes crisscrossing the vast country. In the beginning the firm, which started operations in 1857, was involved in building the steam ships used for transport and trade on the Neva River which flows through St Petersburg, and the Baltic Sea, where it pours its waters. It was also involved in the manufacture of railway locomotives.

When Russia made the strategic decision to use natural gas for domestic and industrial consumption, Nevsky Zavod, which already had the technology to make complicated equipment, was contracted to manufacture the turbines that are now at the heart of the gas ecosystem.

“Every part of the turbine has to be right shape and size and in the right place,” says Alexy Shubin, one of the senior managers at Nevsky Zavod. “The equipment makes over 5,000 rotations per minute.” One such turbine can handle the equivalent of 32 Mega Watts.

Gazprom remains the biggest buyer of these turbines. For the conglomerate, the decision to buy equipment made in Russia by Russians has been a strategic one and is known as “import substitution”.

This is a programme that companies in Kenya can learn from. In the 2023-24 Finance Act, Treasury Cabinet Secretary Njuguna Ndung’u introduced what he called “Import Substitution Tax”. This sparked a major hue and cry among importers, who felt it was targeting them unfairly. However, as Njuguna explained, the tax is meant to discourage importation and encourage local production.

This principle is what has kept Russia going despite the sanctions imposed on it by Europe and America in the wake of the war in Ukraine. When companies like Coca Cola, Visa, Mastercard, Pepsi, Nestle, Univeler and over 3,000 others exited the Russian market, local companies moved in to fill the gap by coming up with near similar products. The country’s history of industrialisation primed it to continue with industrial production while also keeping inflation at a low of 3.3 per cent as at June this year.

Now, its companies are manufacturing trucks, taxis and buses that use natural gas for fuel, meaning that the country’s petrol and diesel import bill, compared to a country like Kenya, will continue to drop as Kenya’s increases. This is one of the factors that have led to Kenya’s perennial trade imbalance. Kenya’s import bill in 2021 was $22.18 billion dollars, a 25 per cent increase from the previous year.
Although exports have started going up this year, according to Central Bank data, the country spent $1 billion more on imports than it earned from exports, meaning that its balance of trade is in the negative, as it has been over the years.

One trend worth noting with Kenya is that its biggest source of income is dollar remittances from its citizens working abroad, not from the sale of processed or industrial products. Other sources of income are the sale of tea, cut flowers and coffee.

All these are primary products that create low level jobs. By contrast, the country spends most of its money on importation of refined petroleum (about $3.5 billion), packaged medicines and cars in that order. All these imports create high quality jobs in the source markets.

If the country starts to exploit its natural gas potential, it can significantly lower its import costs, which would improve its balance of trade, and by extension, leave the country will more money to pay off its debts.

Sources have told People Daily that talks to start offshore gas extraction have commenced. Already, one well has been drilled and is undergoing evaluation to confirm its capacity. Will it yield fruit? That is the question.

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