Retire or renegotiate power purchase deals


Electricity transmission lines at the Suswa power substation in Narok. FILE PHOTO | NMG

Kenya’s purchase of cheap power from Ethiopia will amount to nothing if it fails to lower electricity for homes and businesses.

The country’s problem is not the availability of power but the cost of electricity.

Consumers often complain of high electricity charges, with some of the costs being attributed to idle capacity charges to compensate power generators for electricity generated but ultimately not used.

This is the problem that buying cheaper power from sources such as Ethiopia should cure.

Under the typical power purchase agreement, a power producer gets paid for any electricity produced, even if it is impossible for Kenya Power to sell it to consumers due to excess capacity and other reasons.

Therefore, Kenya must retire and renegotiate some of the power purchase agreements that have made electricity costs steep, making Kenya-made products uncompetitive and killing jobs.

The starting point is the implementation of recommendations of a task force, including a review of the agreements, in particular the expensive thermal power.

The retention of the diesel generators doesn’t also justify the huge public investments made in geothermal and wind power in recent years as well as tapping cheaper Ethiopian electricity.