Kenya will this week sign a power deal with Ethiopia.

The agreement for a Sh54 billion ($666 million) transmission line is expected to enhance trade in electricity between the two East African neighbours.

Kenya seeks to import up to 400 megawatts of power from its East African neighbour thereby stabilising energy supply, which investors have fingered for high cost of business operations and the consequent down turn on competitiveness of goods in regional markets.

“The signing ceremony for the ground breaking and construction will be held at Suswa in the Rift Valley where a base station will be built.The power line will go up to Sodo in Ethiopia,” said Jeff Otieno, Kenya’s Electricity Transmission Company communications manager.

The project is funded by the International Development Association, African Development Bank, the French Development Agency and the government.

Imported power from Ethiopia is expected to be $5 cents cheaper compared to some power plants in Kenya with cost above $10 cents a kilowatt hour.

The electricity line is expected to eradicate the country’s power shortage problem, especially during the dry seasons when water levels in the dams drop.

According to Raphael Khazenzi, the director of renewable energy, “The Gibe III dam in Ethiopia is at an advanced stage and we should have our line ready to start buying power by 2014.”

The power project is expected to go on despite protests that the dam would affect water levels at Lake Turkana, among other negative environmental impact.

The proposed transmission line crosses from Ethiopia into Kenya about 90km west of Moyale town and traverses Marsabit, Samburu, Isiolo, Laikipia, Nyandarua and Nakuru. From Moyale, the transmission line route runs adjacent to the Marsabit-Moyale road southwards avoiding the Marsabit National Park.

The project is part of the plan to establish a regional power pool expected to extend to Tanzania in future.