Secret deals hurting PPP potential

The last time I checked with my sources from both the National Treasury and the PPP Committee that has ultimate approval powers over privately initiated projects, I was informed that the Committee had recommended that both proposals be assessed, scrutinised and that scenarios for the best deal and outcomes for Kenya be considered before a final decision decision can be made.

This is the position you see as you read the minutes of proceedings of the PPP Committee on this matter. I have also seen correspondence showing that both the principle secretaries of the state departments of energy, Alex Wachira, and water and sanitation Ephantus Wachira, have been constantly engaging the French company to discuss their proposal.

This week observers of goings-on within the PPP space were surprised by statements in the media attributed to Ephantus Kamotho, suggesting that a decision had already been made to go with the proposal with the British company.

Under, the headline: ‘Kenya bags deal to build high grand falls dam’, the report said that the government had negotiated a Sh100 billion cut in the original proposal by GBM and that this had happened because of changes in the scope of the project, including a new component of a green field solar system

‘What we have achieved in the negotiations will have the lowest power purchase agreements for irrigation’, said Mr Kamotho.

Have we dropped the proposal from the French and on what grounds? This question is pertinent because we are currently in an environment where the PPP and large infrastructure projects sector are widely perceived by society as very corrupt.

The perceptions out there are that some of these international parties pretending to be big developers with capacity to deliver these huge projects are mere briefcase companies just looking for opportunity to reap billions from flipping the contracts to the real big players with capacity.

In the interest of transparency, the government should publish the two proposals and subject the whole process to public debate.

On what basis should we judge these two proposals? First, we must assess capacity to deliver projects and ability to attract long-term and concessional financing. We must ask: how many similar projects of this size have you done before?

This is the kind of project that will involve displacement of hundreds of thousands of poor peasants. The two developers must be made demonstrate capacity and past success of dealing with safety nets for people displaced by the project.

Read: MPs seek to free thermal IPPs from minimum fuel stock rule

In the electricity sector, we have had a bad experience with the model known as Power Purchase Agreements. The agreements we signed with developers we call IPPs have consigned poor electricity consumers in this country to a permanent regime of high electricity prices.

The only off-taker, Kenya Power, has almost been bankrupted by the power purchase agreements. Yet one of the issue on the cards here is the introduction of water concessions and water purchaser’s agreements.

Privatisation has almost become a religion in this country. But are our people- especially folks living in the rural areas prepared to pay for water for irrigation,

Where is the evidence that the inefficient and grossly under- funded entity known as the National Irrigation Authority has capacity and wherewithal to play the role of off-taker. I think we are experimenting with too many ideas.

Today, the stability of our electricity grid suffers greatly from the impact of intermittent power from solar and wind power. What we need is more base load power. That grandiose idea of introducing solar power in the High Grand Dam plan makes no sense at all.

In November 2022, during a meeting between President William Ruto former British Prime Ministered, Rishi Sunak that happened on on the side-lines of the COP 22 climate summit in Egypt, it was announced that the two leaders had signed a deal to fast tract British investment project valued at Sh500 billion.

It was also announced that the power projects under the deal included a PPP deal to deliver the High Grand Falls Dam. In January 2023, it was announced that the president had during a visit to France, signed another deal on the same project during a meeting with a senior executive of EDF, Mr Valerie Levkov. We need to get more serious with the PPP model.