Kenyan consumers will have a choice to buy electricity tokens directly from independent power producers (IPPs) or Kenya Power if MPs approve a proposal in a parliamentary committee report.
In the latest push to end the Kenya Power monopoly, the National Assembly’s Energy Committee is proposing to have IPPs generating power through geothermal with the help of KenGen to sell power directly to consumers as one of the ways of reducing the high cost of electricity.
The proposal is contained in a draft report of the committee that is currently in Mombasa writing its report on how to reduce the high cost of electricity.
Highly placed sources in the committee said MPs want consumers to choose between buying their power from either Kenya Power or IPPs by choosing which is cheaper.
The proposal, if approved by MPs when the House resumes its sittings on September 26, will be a departure from the current arrangement where IPPs have to sell to Kenya Power to distribute to end consumers.
“The main purpose of this proposal is to give consumers choices on where to buy their tokens from and IPPs to have direct contact with the customers. It is the IPPs that will decide the billing. If a customer feels KPLC is expensive, they can opt for IPPs,” said the source.
To achieve this, the MPs said they would make changes to the law and if possible an amendment to the power purchasing agreements that the IPPs signed.
Sources within the committee said while Kenya Power was opposed to the arrangement due to the existing contracts with the IPPs, MPs insisted that they would do what it takes to give consumers a choice and to reduce the cost of electricity.
The lawmakers are also targeting the cancellation of contracts of five IPPs currently being paid a combined Sh23 billion annually in phases.
“The Sh23 billion we are paying annually means it’s close to Sh1 billion monthly, this is not just sustainable. Those will just have to go,” said the source.
According to the draft report, the contracts will be ended 36 months after the government has put in place enough infrastructure to ensure that there is no vacuum left with the departure of the five IPPs.
While some MPs wanted the contracts to end after 24 months, the technical team advising the committee is said to have been against it saying the period is too short for the government to put up infrastructure in place to fill the void left.
To actualise this proposal, the committee has organised a further engagement with Attorney General Justin Muturi, National Treasury Cabinet Secretary Njuguna Ndung’u and his Energy counterpart Davis Chirchir.
The draft report has also called for re-negotiation of the PPAs on capacity charge and currency of payment which it wants changed to Shillings and not USD as it is at the moment.
Auditor General in her presentation to the committee said the PPAs the government signed with the IPPs have no exit clause and revision depends on the goodwill of the power producers.
Capacity charge is the amount that is payable to IPPs regardless of whether they generate power or not. It prescribes the minimum power that a power producer is expected to add to the national grid and pays for it regardless of whether there is underproduction.
The report is still in draft form and is yet to be formally adopted by the committee and therefore cannot be made public as it has also been shared and tabled in the House hence it would be against the Standing Orders if it is released now.
Some of the recommendations are also likely to change based on the discussion that the committee will have with the Attorney General, CS Treasury and CS Energy.
