The cost of power in Kenya has been made expensive because the power provider buys power expensively from 19 Independent Power Producers (IPPs).
Members of Parliament have rejected a proposal by the government to lift a moratorium on Power Purchase Agreements (PPAs) by the Independent Power Producers (IPPs) in what sets them on a collision course with the Ministry of Energy and Senate.
This even as Energy and Petroleum Cabinet Secretary Opiyo Wandayi assured MPs that the benefit the country is getting is that Energy Petroleum Regulatory Authority (EPRA), the country’s power regulator, is able to publish indicative tariffs that will involve any negotiations between IPPs and Kenya Power.
However, the chairs of committees in the National Assembly rejected the proposal citing concerns over inadequate safeguards to protect taxpayers from potential exploitation by private investors.
The committee chairs also want any agreement with IPPs delayed until an inquiry by the House Energy Committee has been concluded and adopted at the plenary.
“It was not without cause that a motion leading to a moratorium on new PPAs was tabled for consideration in the House. The question is whether those initial concerns have been addressed and the answer is no,” said Mwala MP Vincent Musyoka, the Energy Committee chairperson.
The Ministry of Energy had requested the National Assembly to lift the moratorium specifically on coal-fired power plants, stressing the urgency of expanding power sources to meet Kenya’s increasing power supply needs.
The Senate, through a motion before the House, also wants the government to lift the moratorium and enter into new power deals or renew existing ones with the IPPs.
But Mr Wandayi told the MPs that anticipated growth in power consumption necessitates a diversification of sources, with coal plants positioned as a stable and cost-effective complement to existing hydroelectric power.
“We are definitely imploring on parliament to lift the moratorium to allow IPPs generate more power to enhance the country’s national grid,” said Mr Wandayi.
The Senate motion sponsored by its Energy Committee chairperson Wamatinga Wahome (Nyeri) is premised on the fact that the timeline of a moratorium imposed by the National Assembly on the State-owned Kenya Power Company against entering into new deals with IPPs or renewing the existing ones, has expired.
“In order to cushion Kenyans from the high cost of electricity, the Senate resolves that the Ministry of Energy and Petroleum and Kenya Power be allowed to enter into new power purchase agreements or renew existing power purchase agreements with the Independent Power Producers,” the motion reads.
Since Mr Wandayi was sworn-in as Energy Cabinet Secretary on August 8, 2024, the country has suffered two blackouts blamed for tripping on its high voltage transmission lines.
“The blackouts that we have witnessed as a country have built up over time and are a result of sub-optimal investment in infrastructure,” said Mr Wandayi. In the last two years, the country’s premier airport - Jomo Kenyatta International Airport (JKIA) - has been plunged into total darkness over a series of power outages.
The Senate motion also wants the EPRA to fast track the acquisition of necessary licenses required by the IPPs with valid power purchase agreements for setting up power plants.
Kenya Power Company, the country's leading electricity utility, providing power to over 9.6 customers across the country, imports 17 percent of its electricity from neighboring countries and faces a challenge as the growing demand for electricity is conflicted with the lengthy process of developing power plants.
The development of power plants usually takes 6 to10 years from conception to generation, leading to electricity shortage and load shedding which impedes economic growth.
The cost of power in Kenya has been made expensive because the power provider buys power expensively from 19 IPPs it has engaged when the same can be procured at a cheaper rate from Kenya Electricity Generating Company (KenGen), another state agency.
What the Ministry of Energy has been pondering is the introduction of control measures and public participation over how IPPs are brought on board.
On March 29, 2021, immediate former President Uhuru Kenyatta set up a task force to review power purchase agreements between the government and IPPs.
The setup of the task force saw a moratorium imposed on Kenya Power, preventing it from signing new agreements or renewing existing ones with the IPPs but was lifted by the Cabinet in March 2023.
However, months later, the National Assembly through a motion adopted on April 19, 2023, placed a moratorium, restricting Kenya Power from signing and enewing power purchase agreements (PPAs) with the IPPs pending a report of inquiry by its Committee on Energy and the consequent House resolution on the report.
On Tuesday, Mr Musyoka noted that if the moratorium is to be lifted, the IPPs with existing wind and solar installations should be required to add a backup energy storage facility to harness excess energy produced during the day for peak demand.
“The Ministry of Energy must first implement stringent measures to prevent projects from disproportionately favoring investors at the expense of public interest,” the Mwala MP said.
But even as Mr Wandayi gave the assurance, the committee chairs expressed concern over the Ministry’s inadequate safeguards, saying there is currently no substantial basis for lifting the moratorium.
Mr Musyoka emphasized that parliament, as the people’s representative, must be fully involved in PPA-related decisions.
The Mwala MP cited the recent shifts in indicative tariffs as an example, noting that “the indicative tariffs gazetted in 2012 for wind power stood at Kshs12/ kWh.”
Shortly thereafter, Lake Turkana Wind Power (LTWP) project secured a PPA at Kshs16/kWh over a 20-year term, higher than the forecasted tariffs intended to provide long-term savings.
Recently, the tariffs for wind power were gazetted at Kshs5.8/kWh, illustrating that the earlier contracts could have been three times cheaper.”
He further criticized the handling of the LTWP that was intended as one of Kenya’s Vision 2030 flagship projects, noting that 20 motions were initially brought to parliament to prevent power shortages through “this initiative.”
MPs Dr Robert Pukose (Endebess), the chairperson of the Health Committee and Emuhaya MP Omboko Milemba also weighed in.
Dr Pukose said that before parliament considers lifting the moratorium, the ministry should disclose the power deals.
“We want the Ministry to tell Kenyans how much they are paying for the power purchased from various producers and how much they are being charged per unit,” said Dr Pukose.
Mr Milemba noted that the moratorium was imposed because the PPAs were “so bad that they make Kenyans pay more.”
“How do you expect parliament to lift the moratorium on expensive deals?” posed Mr Milemba.
