Hope for cheaper electricity by Christmas in proposed reforms

Hope for cheaper electricity by Christmas in proposed reforms

  • The Presidential taskforce was chaired by John Ngumi and deputised by Dr. Elizabeth Muli.
  • President Kenyatta considered the report by the taskforce which established vast differences between power purchases by Kenya Power from KenGen and IPPs.
  • The report established the lack of proper demand forecasting by Kenya Power, risk allocation imbalances between Kenya Power and IPPs and uncoordinated institutional architecture.

The Presidential taskforce on the review of Power Purchase Agreements (PPAs) has submitted its report with recommendations expected to cut power costs by over 33 per cent by December 31, 2021.

In a statement on Wednesday, State House Spokesperson Kanze Dena noted that President Uhuru Kenyatta considered the report by the taskforce which established vast differences between power purchases by Kenya Power from KenGen and Independent Power Producers (IPPs).

Further, the report established the lack of proper demand forecasting by Kenya Power, risk allocation imbalances between Kenya Power and IPPs and uncoordinated institutional architecture.

"The President has also examined and welcomed the recommendations of the task-force that establish a path towards the reduction of the cost of electricity by over 33% within four months. The consequence of the proposed interventions is that a consumer who previously spent Ksh.500 per month on electricity shall by 31st December, 2021 pay Ksh.330 per month," read the statement by Kanze Dena.

"This cost reduction will be achieved through the reduction of the consumer tariffs from an average of KES 24 per kilowatt hour to KES 16 per kilowatt hour which is about two thirds of the current tariff."

The statement added: "In affirmation of this seminal and progressive solution to a decades long problem, the President has directed the Cabinet Secretary, Ministry of Energy to secure the immediate implementation of all the recommendations of the taskforce by Christmas Day, 2021."

Among the recommendations by the taskforce include the review and renegotiation of contracts between Kenya Power and IPPS, the immediate cancellation of unconcluded PPA negotiations, and the fast-tracking of reforms at Kenya Power.

Kenya Power is meanwhile expected to take the lead in formulating a Least Cost Power Development Plan (LCPDP), institute due diligence and contract management frameworks and institute a one-to-five year rolling demand and generation forecasts.

Moreover, the utility company has been directed to adopt standard PPAs and proposed government letters of support (LOS), undertake a forensic audit on procurement and system losses arising from the use of Heavy Fuel Oils (HFOs) and include the names and beneficial owners of all IPPs it contracts.

The Presidential taskforce was chaired by John Ngumi and deputised by Dr. Elizabeth Muli.