Newly appointed Energy Cabinet Secretary Opiyo Wandayi has promised to complete key projects in the sector, including major power transmission lines whose completion has stalled for years.
He has also pledged to boost the uptake of Liquefied Petroleum Gas (LPG) by the public in a country where firewood and charcoal remain the predominant methods for cooking.
But the former legislator has his work cut out in a heavy investment sector at a time where the State is grappling with severe cash constraints.
Just five months after taking office, Mr Opiyo Wandayi will be faced with a critical decision on whether to end or extend the controversial government-to-government (G-to-G) deal between Kenya and the Gulf states.
Mr Wandayi was sworn into office on Thursday as the Cabinet Secretary for Energy and Petroleum, replacing his predecessor Mr Davis Chirchir who has taken over the roads and transport docket.
The G-to-G deal between Kenya and three State-owned oil companies – Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), and Emirates National Oil Company (ENOC) expires on December 31, 2024.
Kenya signed the deal in March last year to ease a biting shortage of US dollars in the market and stabilise the Kenyan shilling. It was initially expected to end after nine months but was extended to the end of this year.
Mr Wandayi will be tasked with deciding whether to revert to the competitive procurement of oil through the Open Tender System (OTS) or extend the G-to-G deal, which has attracted a lot of criticism due to its opaque nature.
Kenya’s oil dream
Within the same short five months, Mr Wandayi will also be tasked with deciding whether to give or deny Tullow Oil an oil production license.
The British oil company has been given a six-month extension to tweak its Field Development Plan (FDP) to close all the gaps that the government found in its initial plan.
The review of the FDP will end on December 31, 2024. The Ministry of Energy and the Energy and Petroleum Regulatory Authority (Epra) will thereafter decide whether or not to grant the company a production license.
The license would however also need to be ratified by Parliament. Kenya’s dream to become an oil exporter hinges on Tullow, which now fully owns the three main oil blocks in Turkana that have proven oil reserves can be extracted economically.
Cost of fuel, electricity, gas
A major headache that the new Energy CS faces is the decades-old conundrum of how to lower the cost of energy, which is pivotal to the country’s manufacturing agenda, while also attracting private capital to the sector.
Mr Wandayi will especially face pressure from consumers to lower the cost of fuel, which has become an easy target for the government to raise revenue through the addition of multiple taxes.
He will also be expected to battle cartels in the power sector to reduce the cost of electricity. Key will be negotiating favorable terms for consumers in new Power Purchase Agreements (PPAs) signed by the government to procure power.
This comes just over a year after the Cabinet lifted a ban on the signing of new PPAs.
To promote clean cooking, Mr Wandayi will be charged with accelerating the State’s interventions in cooking gas. This includes cutting taxes on cooking gas and fast-tracking the regulation of prices.
Grid expansion, dealing with outages
Another headache the former legislator will have to deal with is the frequent nationwide power outages that have rocked the country over the past year, disrupting business activities.
The outages have been largely blamed on inadequate infrastructure – which is costly to build - particularly a lack of enough transmission lines to handle growing electricity demand.
Mr Wandayi will be expected to drive the country’s electricity access from the current 76 percent and closer to the universal access target by 2030.
To handle millions of new connections and growth in demand from existing customers, he will also be expected to accelerate the contraction of new generation capacity and expand the existing infrastructure to support this growth.
