IPPs with opaque ownership locked out Kenya Power sales deals
Kenya has for the past three years stepped up efforts to lower the cost of electricity, mainly by lowering wholesale prices at which IPPs sell electricity to Kenya Power.
Independent Power Producers (IPPs) that do not fully disclose details on their beneficial owners will be locked from signing electricity sale deals with Kenya Power from next year, in a move meant to arrest conflict of interest.
The National Assembly Departmental Committee on Energy has recommended MPs to adopt this directive, to align PPAs deal with the legal requirements on ownership disclosures besides ending graft.
Currently, the majority of IPPs have failed to fully disclose their beneficial owners, amid increased cases of conflict of interest at a time the State has stepped up efforts to push IPPs to lower the prices of electricity and ultimately benefit consumers.
The directive follows revelations by the Business Registration Service (BRS), that IPPs did not comply with similar directive years ago and only published scanty information on their beneficial owners.
“All new power purchase agreements will only be entered into with a power generation entity that has fully disclosed and registered full beneficial ownership in compliance with the Act,” the committee says in the report tabled before the House for adoption.
Kenya has for the past three years stepped up efforts to lower the cost of electricity, mainly by lowering wholesale prices at which IPPs sell electricity to Kenya Power. The push has also led to the demands that all owners of IPPs be revealed amid concerns that they (owners disguised as foreigners) are profiteering from charging high prices which are borne by homes and businesses.
IPPs like other firms doing business with the government are under the Business Registration Act of 2015 required to disclose details of their beneficial owners.
“Notably, there is a general opaqueness in the disclosure of beneficial owners of the IPPs with a majority of them listing foreign companies as shareholders,’ BRS told the committee. The directive also seeks to compel Kenya Power to disclose the beneficial owners of each IPP in its annual report.
Currently, Kenya Power only publishes the names of each IPP, the amount of electricity purchased and all costs tied to the particular producer.
The push to unmask beneficial owners of the IPPs comes at time the country is expected to lift a moratorium on new PPA deals that was issued last year.
Lifting the veil on owners of IPPs is one of the moves meant to bring more transparency in the deals between Kenya Power and electricity producers, amid concerns that some of the IPPs are unfairly benefitting at the expense of consumers.
For example, the committee report shows that Ernest Nadome who sits on the board of directors of Kenya Power Pension Fund also serves as a director at Gulf Power, one of the IPPs selling electricity to Kenya Power.
Kenya Power had PPAs with 23 power producers as at June this year, but there are huge disparities on price per unit mainly based on the energy source.
Thermal plants are the most expensive with a unit going as high as Sh56.73 while hydro is the cheapest with a unit retailing at Sh3.83 as at February this year.
