The Senate has forwarded a proposed law that seeks to compel Kenya Power to disclose owners of power-producing firms to the National Assembly, escalating a push to end costly Power Purchase Agreements (PPAs).
The Energy (Amendment) Bill, 2023 was on Thursday lined up for the first reading in Parliament. Senators already backed it and it now requires the concurrence of MPs before it is signed into law.
The Bill will require Kenya Power to publish on its website names of all beneficial owners of independent power producers with which it has agreements and have the same information in its annual audit reports.
Costly PPAs have been blamed for derailing efforts to cuts cost of power to homes and businesses prompting the push to unmask owners of the IPPs.
“A purchasing entity shall prepare and maintain a register of generating entities it has entered into energy purchase agreements with and the entity’s beneficial ownership and publish the names of the same on its website and in the annual audit report," reads the Bill sponsored by Nairobi Senator, Edwin Sifuna.
Kenya Power has energy purchase agreements with 14 IPPs, with five a-piece supplying wind and thermal and two each for wind and geothermal. KenGen supplies at least 60 percent of electricity to Kenya Power every year but accounts for about 20 percent of the money that Kenya Power pays for electricity purchased from all producers.
In the year ended in June, Kenya Power paid IPPs Sh18.3 billion for electricity purchased compared to Sh5.2 billion to KenGen, underscoring the huge disparities in the cost of energy.
The cost of 200 units of electricity averaged Sh5,687 last month, compared to Sh4,920 in the same period in 2021, with MPs alleging that IPP owners are to blame.
Hydro is the cheapest power source at an average cost of Sh3.83 per unit followed by geothermal and Ethiopian imports at Sh10.28 a unit and Sh10.69 a unit respectively. Most of the hydro dams are owned by KenGen.
Adoption of the Bill by the National Assembly will push it to the President for enactment into law, further increasing transparency on the PPAs. The majority of the PPAs last for at least 20 years, meaning that a costly deal locks consumers for lengthy periods.
Most of the PPAs are dollar-denominated meaning that a weakening shilling directly inflates the cost of electricity.
Power purchase costs to Kenya Power include non-fuel costs (capacity charges, energy costs, and steam charges), fuel costs (cost of fuel incurred in the generation of electricity), and foreign exchange costs.
The proposed changes will also compel IPPs with current deals and those seeking power sale agreements with Kenya Power will also be required to make public information on their beneficial owners, in line with the Companies Act.
Kenya had sought to cut electricity prices by 15 percent in 2022, banking on a downward review of the wholesale prices at which IPPs sell electricity to Kenya Power.
The bid flopped after the IPPs rejected the government’s proposal, prompting lawmakers to pursue legal changes that will overhaul how PPAs are inked.
