Uhuru orders Kenya Power to reduce electricity prices

By , People Daily Digital
Wednesday, September 29th, 2021 15:14 | 3 mins read
President Uhuru Kenyatta. Photo/PD/PSCU

President on Wednesday 28, 2021 received the Report of the
Presidential Taskforce on Review of Power Purchase Agreements constituted vide Gazette Notice No. 3076 of 29th March, 2021.

The Taskforce was constituted by the Head of State in response to
calls from a wide cross section of Kenyans to address concerns about the
high cost of electricity for both individual consumers and enterprises.

Further, in constituting the Taskforce, the Administration was
concerned that high electricity prices constrain economic activity and limit
the realization of our shared aspiration of becoming a globally competitive,
newly industrialized, middle income, and prosperous country.

To address these concerns, the core mandate of the Taskforce was
“undertake a comprehensive review and analysis of the terms of all Power
Purchase Agreements (PPAs) entered into by the Kenya Power and Lighting
Company Limited (KPLC)…. and develop a suitable strategy for
engagement with the Independent Power Producers (IPPs) and lenders, in
order to achieve relief for electricity consumers and ensure the long-term viability and sustainability of the energy sector.”

The President has also examined and welcomed the recommendations
of the Taskforce that establish a path towards the reduction of the cost
of electricity by over 33% within four months.

The consequence of the proposed interventions is that a consumer
who previously spent Ksh. 500 per month on electricity shall by 31st
December, 2021 pay Ksh. 330 per month. This cost reduction will be
achieved through the reduction of the consumer tariffs from an
average of KES 24 per kilowatt hour to KES 16 per kilowatt hour
which is about two thirds of the current tariff.

In affirmation of this seminal and progressive solution to a decades-
long problem, the President has directed the Cabinet

Secretary, Ministry of Energy to secure the immediate
implementation of all the recommendations of the Taskforce by
Christmas Day, 2021.

The Taskforce recommendations include:

I. Review and Renegotiations with Independent Power Producers
(IPPs) to secure immediate reduction in Power Purchase Agreements
(PPA) tariffs within existing contractual arrangements;

II. Cancellation with immediate effect of all unconcluded
negotiations of Power Purchase Agreements and ensure future PPAs
are aligned to the Least Cost Power Development Plan (LCPDP);

III. Fast-track and deepen the ongoing reforms at KPLC to
restructure it into a commercial entity that is both profitable and also
capable of delivering efficient and cost-effective electricity supply to
all consumers;

IV. KPLC to take the lead in formulation and related PPA procurement
of the Least Cost Power Development Plan (LCPDP);

V. KPLC to institute Due Diligence and Contract Management
frameworks for PPA procurement and monitoring along the lines of
the drafts provided by the Taskforce;

VI. KPLC to institute one and five-year rolling demand and
generation forecasts and associated models;
VII. KPLC to adopt standard PPAs and proposed Government
Letters of Support (LOS) along the lines of the drafts provided by
the Taskforce;

VIII. KPLC to undertake a forensic audit on the procurement and
system losses arising from the use of Heavy Fuel Oils (HFOs);

IX. In line with the constitutional imperative for transparency in
the public sector, KPLC’s annual reports should include the
names and beneficial ownerships of all IPPs with which it has
contractual arrangements.

On behalf of a grateful nation, The President thanked the Taskforce for their sense of civic duty and professionalism and
for expeditiously discharging their mandate.

The Presidential Taskforce was led by Mr. John Ngumi, as the
Chairperson, Dr. Elizabeth Muli as the Vice-Chairperson and included the
following members: Solicitor-General Mr. Kennedy Ogeto; Hon. Justice (Rtd.) Aaron G. Ringera; Dr. James Mcfie; Mr. Mohammed Nyaoga, SC; Eng.
Stanley Kamau; Ms. Wanjiku Wakogi; Eng. Isaac Kiva; Dr. Caroline Kittony;
Eng. Elizabeth Rogo; Mr. Sachen Gudka; Eng. James N. Mwangi; Dr. John
Mutua; Ms. Anne Eriksson; and Mr. Yida Kemoli. The Joint Secretaries were
Mr. Jasper Mbiuki (Executive Office of the President), Ms. Lillian Abishai
(Office of the Attorney-General), and Ms. Elsie Mworia (KPLC).

The President has also conveyed his gratitude to the
new Board of Kenya Power for steering the ongoing ground-breaking reforms in the nation’s anchor utility company.