Parliament has asked the Energy Ministry and the Treasury to change tack and build some three power transmission lines under a public-private partnership (PPP) to ease pressure on the Exchequer.
The three are the Loiyangalani-Marsabit, Marsabit-Isiolo and Gilgil-Thika-Konza lines, each with a capacity of 400 kilovolts (KV), whose construction had been planned to be funded through loans.
The change is meant to ease pressure on the Treasury which is grappling with high debt servicing and reduce the loans build-up.
Currently, all transmission lines in Kenya are funded by the Exchequer or by donors through on-lent funds.
The proposal, if adopted, will see the government pay the investors through an annuity or the funds being recouped through the electricity tariffs or both.
“The PPP framework should clearly state the measures put in place to manage the associated risks and contingent liabilities,” the Budget and Appropriations Committee (BAC) said in a report on the upcoming Budget.
The Energy and Petroleum Regulatory Authority (Epra) has also backed the push but warned that the policy change should not lead to a recoup of the investors' billions through electricity tariffs.
“Our issue as the regulator is a policy change that will have us provide for the revenues to pay off the investment through the tariff,” Epra director-general Daniel Kiptoo told the Business Daily.
Kenya has indicated a turn towards the PPP model to fund major infrastructure projects due to tightening fiscal headroom.
Some 45 projects were lined up for PPP as of July last year, with 39 being in electricity generation in renewable and thermal energy totalling 3,034 megawatts and the remaining six in roads (639 km) under the roads annuity and tolling.
The Treasury first disclosed plans to build two Sh37.65 billion power transmission lines through a PPP model last year.
