Radical surgery on Kenya Power timely
The government has made its most significant step to stop the spiraling cost of electricity that has been a major factor in the high cost of living in the country.
Electricity cost is a major enabler in that it not only affects the cost of production but also makes homes and places of work liveable
By freezing the contracting of additional Independent Power Producers (IPPs) and ordering Kenya Power to review the existing Power Purchase Agreements (PPAs), it is hoped that the cost of electricity will drop in the short-term.
This comes hot on the heels of recommendations of the Presidential Task Force on the Review of PPAs, which had called out the IPPs following widespread concerns of high electricity bills.
Introduced in the early 2000s to stabilise the supply of electricity in the country, the projects were intended to bridge the power generation gap following years of under investment in the power industry. The country was plunged into regular blackouts between 1999 and 2000 as a two-year drought saw Kenya’s hydropower dams dry up, calling for help from the IPPs.
With increased capacity in recent years however, these IPPs have become a source of great distress to consumers with their high tariffs being passed on to consumers on account that a lot of money is used to cover the cost of fuel used in generating electricity.
For a while, Kenya Power has been running at a loss, with all indicators pointing to theft and outdated infrastructure. However, ineffective PPAs have also left the company heavily indebted for paying excessive cash due to poor negotiations and vested interests.
A Cabinet sub-committee task force was constituted by President Uhuru Kenyatta in June and asked to find ways of redeeming the company. Key among its recommendations was a two-thirds reduction in the cost of power paid to IPPs, from Sh24 kilowatts per hour (KW/h) to Sh16 Kw/h, equivalent to 33 per cent reduction from December 31, 2021.
Going forward, there is a need to pay greater attention on alternative sources of electricity, especially renewable power which is cleaner and more reliable.
And like the cost of fuel, concerned authorities must make electricity cost more predictable since it also plays a key role in the cost of living.
If the cost of these two commodities can become more predictable and affordable, Kenyans could boost their livelihoods, and local products will become competitive in the global market.
