Govt invites independent power producers for negotiations with Kenya Power
Negotiations between the government, Kenya Power and independent power producers (IPP) have begun as the government opts out of invoking summons and orders to the private sector players.
“Any IPP keen to commence this process should write to the Ministry of Energy through the Principal Secretary expressing this interest formally by November 19 (this Friday),” said Energy CS Monica Juma.
“I formally invite all IPPs to come to the negotiation table so we can engage towards a win-win solution that secures a sustainable energy sector in the Republic of Kenya.”
The applications by IPPs are expected to be followed by a notification of scheduled sessions with the initial engagement consisting of a select team of the energy sector led by the Ministry’s Chief Administrative Secretary Zachariah Ayieko.
The select team is later expected to give guidance on the way forward.
The announcement serves to ensure transparency in the process which she says will be devoid of confusion, intermediaries, brokerage and forum shopping from stakeholders.
The review of Kenya Power’s power purchase deals with independent producers has been deemed the cornerstone in bringing cheaper electricity to Kenyans and lowering the utility companies cost base.
Kenya Power power purchase costs borne to the IPPs has been heavily skewed with the firm paying billions to the dealers for less power with cost per unit being above board.
According to an audit report of Kenya Power’s books by Auditor General Nancy Gathungu, the company spent Ksh.49.2 billion to pay the independent dealers in the year ended June 2021 which represented about 52 percent of its entire power purchase costs.
The review of the power deals has been fronted by a Presidential Appointed Taskforce whose recommendations, if fully implemented, are tipped to bring down the cost of power by 33 percent by December 31, 2021.
The Ministry of Energy has defended its plan to reduce the cost of energy consumption from the Kenya Power to cushion Kenyans from high cost of living.
“Our focus will be to deliver on the reduction of tariff by 33 percent by 23rd of December 2021 and to review and renegotiate the terms of Power Purchase Agreement (PPA),” added Juma.
According to CS Juma, the reforms will also reduce tariffs for industries and domestic consumers while protecting the environment.
The power distributor bounced back to making profits when it posted a Ksh.8.2 billion pretax profit for the year ended June 30, 2021.
This is compared to previous record when it registered Ksh.7.04 loss before tax, representing a 216 percent year-on-year growth.
The positive results come at a time when the company, which enjoys a monopoly of power distribution in the country has come under criticism over public funds mismanagement.
This even as the Ethics and Anti-Corruption Commission (EACC) continues with a lifestyle audit for Kenya Power employees, a move seen at weeding out fraudulence at the power distributor.
The exercise began with the executive, and is trickling down to the junior staff.
EACC is keen at verifying the wealth immersed by each employee including contractors sourced to do business with Kenya Power.