MPs set for clash with Cabinet after barring Kenya Power from new PPAs

Parliament in session. FILE PHOTO | JEFF ANGOTE | NMG

Parliament has now barred Kenya Power from signing new power purchase agreement (PPA) deals for at least four months amid an inquiry into current agreements.

The move is likely to spark off a clash with the Cabinet which recently lifted the ban imposed last year.

The House voted by acclamation to endorse the freeze and pave the way for a fresh investigation into current deals between Kenya Power and Independent Power Producers (IPPs).

A Cabinet meeting by President William Ruto lifted the ban in February to allow more plants into the national grid and help lower the impact of declining production from hydroelectricity dams.

“This House, therefore, resolves that in the meantime, the ministry and Kenya Power should not enter into new contracts with any IPPs until the House resolves the matter,” read Wednesday’s order paper.

But it remains to be seen whether the Energy Ministry will comply with the decision as Kenya seeks to bring more plants to the grid, especially those generating clean power.

The previous administration banned Kenya Power from signing new power purchase agreements with IPPs last September on the recommendation of a task force.

A biting drought cut the generation of hydropower to record lows from the end of last year, prompting increased uptake of thermal power, an import deal with Ethiopia and more production from wind sources to plug the deficit.

Hydro fell behind wind in the national power mix, highlighting the impact of the declining generation from the dams that threatened the stability of the power supply, especially at peak demand.

Kenya started importing electricity from Ethiopia in January at a rate of $6.50 cents per kilowatt hour, which is significantly lower than the tariffs charged by the IPPs.

Kenya Power buys the bulk of power from KenGen at Sh5.3 per kilowatt-hour but other IPPs have priced their power as high as Sh195.

The high wholesale prices charged by IPPs have squeezed Kenya Power’s ability to lower the cost of electricity.

Lawmakers directed the Committee on Energy to probe the current power purchase deals and table the report within four months.

Power purchase deals between Kenya Power and private electricity producers have come under scrutiny in recent years given the high prices offered compared to those of KenGen.

The Auditor General has also raised concerns about the power purchase agreements saying that in some instances, Kenya Power is selling electricity at losses due to the high wholesale prices.

The Parliamentary probe comes months after the Ministry of Energy went cold on a plan to renegotiate power purchase deals between Kenya Power and big IPPs last year, eventually denying consumers an 18 percent drop in power prices.

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