State ropes in diplomats to expedite KP overhaul
Thursday, October 14th, 2021 00:00 | 2 mins read
The government has enjoined diplomats from countries where Independent Power Producers (IPPs) originate in renegotiating existing purchase agreements in a bid to lower the cost of electricity.
Interior Cabinet Secretary Fred Matiang’i yesterday said the Inter-Ministerial taskforce on the Review of Power Purchase Agreements (PPAs), which he chairs met with the diplomats on Tuesday.
“Yesterday (Tuesday) we had a meeting with a number of diplomats from whose countries some of these Independent Power Producers come and we have began serious discussions on renegotiating these agreements with the intention of bringing down the tariffs and therefore of course bringing down the cost of power as it were,” he said.
Matiang’i was speaking during the inaugural meeting of the Steering Committee on Implementation of the Report on the Presidential Task Force on Review of Power Purchase Agreements at the Kenya School of Government in Nairobi.
In the first briefing by the taskforce on October 8, the CS announced a freeze on contracting of additional IPPs in addition to ordering Kenya Power (KP) to review existing agreements following widespread concerns of high electricity bills.
Analysts reckon roping in diplomats could be a way of forestalling international litigation by the IPPs, who can accuse the government of interfering with contracts signed at prevailing market rates and agreed upon. “I am foreseeing them going to court.
The reference for appeal or mediation might be outside Kenya,” said Victor Ogalo, head of policy, research and public private dialogue at the Kenya Private Sector Alliance.
Cost of power
According to Ephraim Njenga, an energy analyst, Kenya Power (KP) buys a unit of power from KenGen at an average of Sh5.48, and sells it at Sh16.31.
He says during the period, the weighted average cost of power bought from IPPs was Sh35 per unit, with the amount charged ranging between Sh19 to Sh173 per unit, adding that some of the expensive thermal generating companies are operated by companies owned by the UK, Netherlands and Norway governments.
Matiang’i who was flanked by Energy CS Monica Juma and members of the task force said all State agencies in the energy sector, including EPRA, KP and the Ministry of Energy and Petroleum will coalesce and address the myriad of challenges the sector has faced recently, including lowering the cost of fuel.
“I can confirm a lot of good work has been done in ensuring that we align our objectives and we work together to address some of these challenges,” he said, adding that in the coming days there will be “significant changes in the cost of fuel.”
He said the taskforce had co-opted the private sector in its ranks and will work around the clock to achieve the changes necessitated by the desire to resolve the country’s strategic development objectives by addressing the challenges such as the cost of living, and doing business.