The Ministry of Energy has put in place a detailed plan for reforms that will see the energy sector provide the citizenry with electricity that is accessible and affordable for both domestic and industrial use.
The Cabinet Secretary for Energy Amb. Dr. Monica Juma said the Government, through the Ministry of Energy is reviewing ways of generating energy that is of low cost and reducing tariffs for industries and domestic consumers while protecting the environment.
She said energy is a critical enabler to the government’s ‘Big Four’ Agenda, a need that has made the government to focus on addressing all the challenges facing the sector and in particular, boosting the Kenya Power and Lighting Company (KPLC), to enable it provide effective services.
The CS was who was in the company of the Principal Secretary (PS) for Energy Major General (Rtd), Dr. Gordon Kihalangwa, was speaking at a Nairobi hotel, today, during a meeting with the members of the Kenya Editors Guild, to enlighten them on the strategies the Ministry of Energy is undertaking to revamp the sector.
She said due to the outcry from consumers, businesses and individual Kenyans regarding the high cost of power supplied by KPLC which they compared to the cost in the neighboring countries, the government has commenced the necessary reforms to the energy sector and KPLC.
“Our focus will be to deliver on the reduction of tariff by 33 per cent by 23rd of December 2021 and to review and renegotiate the terms of Power Purchase Agreement (PPA),” said Juma.
The CS said the Taskforce appointed by the President to Review Power Purchase Agreements (PPAs) to pursue the reduction in the cost of power to boost the growth of Kenyans and the country’s prosperity completed its task and raised questions on the payment of tariffs to Independent Power Producers (IPPs), their procurement process and the nature of their contractual terms and their style of operation.
According to the Taskforce Report IPPS accounted for 47 per cent of power procurements cost in Financial Year 2020, but only accounted for 25 per cent of power volumes, whilst KenGen accounted for 48 per cent of costs and 72 per cent of volumes.
“The Report also showed that tariffs paid to certain IPPs were higher than what is charged by KenGen for comparable plant technologies in the same locality,” stated Dr. Monica.
Regarding the findings, the CS announced that the government and KPLC will discuss with respective IPPs on the concerns in order to renegotiate and/or terminate PPAs found to have material breaches, adding that a number of IPPs and stakeholders have already approached the Ministry and expressed interest for discussions.
She added that the government is determined to address the challenges so that Kenyan consumers and businesses can have access to safe, affordable and reliable power, while delivering to investors and lenders a fair, equable and sustainable return for their investment.
“The negotiations and termination will be undertaken within the stipulations of the respective contracts, adhering to contractual obligations and provisions within the confines of the law, but most importantly, responding to the national interest of this nation,” stressed Juma.
Some of the recommendations by the Taskforce include an immediate review of all prevailing generating tariffs for the different technologies benchmarked against global tariffs, with the aim of unbundling of the transmission and distribution tariff for transparency in the supply of electricity and ensure cost recovery in line with the principle of prudently incurred costs.
She at the same time announced that the recommendations can only be achieved when organizational structure, procurement, management of systems and technical losses, governance and financial restructuring reforms are undertaken at KPLC.
“KPLC will henceforth be expected to exercise diligence in the generation mix for the country, as dispatch of power will be advised by accurate forecasts and available capacity which will deliver the lowest cost tariff,” the CS stressed
The Principal Secretary for Energy said the Ministry has already acquired 350,000 electricity meters for installation across the country.
He said the Ministry is working on the leakages and assured the citizenry that power outages will always be addressed promptly, adding that delays in addressing power interruptions have led to loss of revenue.
“All regional heads have been instructed on what to do to ensure power outages are a thing of the past,” said Dr. Kihalangwa.
By Bernadette Khaduli