Ending the monopoly of the Kenya Power and Lighting Company (KPLC) and reducing the number of Independent Power Producers (IPPs) are some of the suggestions made by a consumer lobby group to a parliamentary committee probing the high cost of electricity.
The Electricity Consumers Society of Kenya (Elcos) told the National Assembly Committee on Energy that KPLC's monopoly must be ended as soon as possible as a first step to cushion consumers from the high cost of electricity.
Appearing before the committee, which is investigating the high cost of electricity, the lobby group told MPs that there was an urgent need to allow other investors in the industry to provide alternatives to consumers.
The society's secretary general, Joshua Gwara, told MPs that energy was a major economic driver, especially for small and medium enterprises (SMEs), and should not be left in the hands of KPLC alone.
“This is one of the killers of the economy, if we cannot come up with radical changes, then we can’t attract investors in the country. The SMEs which are major drivers of our economy in our country are suffering because of the high cost of power,” Mr Gwara said.
“Kenya Power is selling power to consumers at an exorbitant price compared to how they buy it from the power producers and this is because of the monopoly they enjoy. This committee can make laws to allow other investors to rival KPLC,” he added.
The lobby group has borne the brunt of the high electricity bills and they have nowhere to take their complaints as KPLC is arrogant and always settles the outstanding bill before listening to any objections.
They called on the committee to make it an independent group with constitutional powers to monitor Kenya Power.
"We need to allow other players to end KPLC monopoly. In Kenya as a consumer if you don't have kplc. You'll be in darkness compared to other countries where they have at least three options," he noted.
The group Executive Director Isaac Ndereva told MPs that the country does not need the 30 Independent Power Producers currently engaged by the government saying they gobble billions of taxpayers’ money yet just add to the burden of the high power cost.
According to Mr Ndereva, the country only needs four IPPs from the current 30
“Let us contract IPPs only on the power that we need. It is not tenable for us as a country to pay for even power that has been produced but we have not taken because we operate on the system of take or pay,” Mr Ndereva said.
Take or pay is a policy whereby taxpayers pay IPPs for electricity produced even if it has not been used. MPs have called for a review of this arrangement so that Kenya Power can only pay for power consumed and not for power produced.
Mr Ndereva pointed out that reducing the number of IPPs will save taxpayers billions of shillings paid to power producers as capacity charges for energy produced but not used.
He cited a power plant with a capacity to produce 87MW, but KPLC only takes 25 percent but ends up paying for the entire 87MW.
Asked how the country should go about terminating the contracts of the IPPs and the billions that will be paid in compensation, Mr Ndereva said it would only take the country two years to pay them off.
"This should not worry us, we should rather pay the Sh300 billion now which we can do in two years and terminate the contracts before it reaches Sh1 trillion," Mr Ndereva said.
The energy ministry had told the committee earlier this month that terminating the IPPs' contracts midway would leave taxpayers on the hook for Sh264 billion in compensation.
Mr Ndereva also called for a review of the foreign exchange adjustments in the signed Power Purchase Agreements (PPAs), which he said increase over the life of the agreement and end up being passed on to consumers.
"These costs are passed on to customers every month as pass-through costs in electricity bills. This has a very negative impact on consumers," Mr Ndereva said.
Mr Ndereva said IPPs should also be paid in Kenyan shillings like other companies such as Diageo, Toyota and Vodafone.
The committee will meet KPLC again on Thursday, August 22 as it continues its probe into the high cost of electricity.
In April last year, the National Assembly adopted a motion by Laikipia MP Jane Kagiri, which among other things, resolved that the committee should conduct an inquiry into the operations of Kenya Power in relation to the agreements it has with the IPPs.
