MPs have revived the push for the establishment of an autonomous office charged with procuring new independent power producers (IPPs) in a fresh reforms push targeting to lower the cost of power.
The parliamentary Departmental Committee on Energy wants the Energy ministry to establish an IPP Office within three years.
“The Cabinet secretary for the Ministry of Energy and Petroleum, in conjunction with the Cabinet secretary for the National Treasury, to initiate the formation of an IPP Office within 36 months upon the adoption of this report,” said the committee.
The committee, chaired by Mwala MP Vincent Musyoka, made the report after a benchmarking tour of South Africa last October.
It observed that South Africa established an IPP Office in 2010 to provide rapid solutions to the country’s severe electricity supply constraints by procuring new energy generation capacity from IPPs.
The office is not a legal entity but operates as a project office hosted by the Development Bank of South Africa under a memorandum of understanding between the lender, the Department of Mineral Resources and Energy and the National Treasury.
In Kenya’s context, the MPs want the office to incorporate membership from the National Treasury, Attorney-General, Ministry of Energy and Petroleum, Kenya Power and the Energy and Petroleum Regulatory Authority.
The office will be tasked with procuring, managing, implementing and monitoring IPPs.
This is, however, not the first time Kenya is mooting to set up an autonomous office to procure IPPs, a role currently being undertaken by Kenya Power with concurrence from the Ministry of Energy.
The Presidential Task Force on the Review of Power Purchase Agreements (PPAs), which submitted its report to former President Uhuru Kenyatta in September 2021, proposed the establishment of the office as a unit at Kenya Power.
In that proposal, the IPP Office would be reporting directly to the Kenya Power managing director.
“This office would be the PPP node for KPLC, and should report to the managing director’s office comprising officers with skills in finance, legal, technical and economics,” said the report of the task force, which was chaired by veteran banker John Ngumi.
It is expected that an autonomous IPP Office would streamline the current process of onboarding new IPPs, which is opaque, leading to the signing of long-term skewed take-or-pay deals that have burdened consumers with costly power.
