A Bill that seeks to end Kenya Power’s #ticker:KPLC monopoly has been re-submitted for debate in Parliament amid lukewarm support by top Energy ministry officials.
The amended Energy Bill 2017 proposes the licensing of other electricity distributors and retailers outside Kenya Power’s stranglehold — promising homes and businesses a choice and better quality of service.
But Energy Principal Secretary Joseph Njoroge Tuesday said the power retail market cannot be opened up — at least not in the next five years — for lack of a framework and an underdeveloped transmission network.
The ministry reckons that market liberalisation would see Kenya Power default on its contractual obligation of buying specified amounts of power from producers since the entry of other players would eat into its retail market share.
It says that competition will force the government-owned power distributor to pay hefty fines to producers such as KenGen #ticker:KEGN for power not used as its demand base narrows with the expected shifting of homes and businesses to other service providers.
“We must regulate the retail market and protect Kenya Power,” said Mr Njoroge, adding that market liberalisation is only feasible upon the expiry of Kenya Power’s long-term contractual agreements with producers.
Kenya Power has power purchase agreements with producers of up to 25 years with some inked decades ago and due to expire.
Should the market be opened up, retailers will buy power from different sources and pay for using the State-owned transmission network to transport it to consumers.
The Bill, which was tabled in Parliament last week, aims to create room for new players in a sub-sector where Kenya Power operates as a monopoly.
“A retail licence authorises a person to supply electricity to consumers through a series of commercial activities including procuring the energy from other licensees, inspection of premises, metering, selling, billing and collecting revenue,” reads the Bill.
Mr Njoroge said the sector cannot be compared with telecommunications, which the government opened up attracting several players and upping competition which lowered consumer rates.