Senators seek audit of power generation deals

Kenya Power

Kenya Power employees carry out repairs on transformers in Mombasa Town.

Photo credit: Pool I Nation Media Group

Senators now want the controversial contracts signed between the national government and independent power producers (IPPs) investigated, terming them punitive.

The legislators decried that the deals with the IPPs are behind the incessant high electricity costs. This follows calls by MPs in October to allow KenGen to sell power directly to consumers to rein in the high cost of electricity.

Marsabit Senator Mohammed Chute, in a motion before the Senate, raised concerns that the private power generating companies, popularly known as IPPs, only supply 28 per cent of electricity to Kenya Power but account for 47 per cent of power purchase costs.

onsequently, the Senate Standing Committee on Energy has been tasked to inquire the details of the IPPs contracts detailing the cost, capacity and duration of the agreements and their implications on the affordability of electricity in the country.


Further, the committee chaired by Nyeri Senator Wahome Wamatinga will also look into the discrepancy in the cost of electricity sold to the Kenya Power and Lighting Company (KPLC) by KenGen, imports from Ethiopia and IPPs.

The senators said the imbalance in the demand and supply of power, coupled with payments by Kenya Power for power not consumed and fluctuation in the foreign exchange rates, contribute to the high cost of electricity.

Senator Chute said the Ministry of Energy must come up with a policy framework aimed at lowering the cost of electricity as a way of addressing the high cost of living.

“Energy is an essential factor of production and its total consumption is a major determinant of the performance of the economy with its cost and reliability spurring or stifling economic growth,” said Mr Chute.

During his vetting last month, Energy Principal Secretary Alex Wachira pledged to deal with rogue IPPs who he blamed for a surge in the cost of electricity.

He said KenGen currently produces 75 per cent of the power produced while the IPPs account for only 25 per cent.

Total overhaul

Nairobi Senator Edwin Sifuna decried that Kenya entered into very expensive deals with IPPs that have made the cost of power exorbitant, calling for a total overhaul of the energy sector.

Interestingly, the contracts have an average length of 23 to 27 years, with a majority expiring in 2030 while some going on to 2043.

Tana River Senator Danson Mungatana called for the individuals who signed the punitive contracts with the IPPs to be prosecuted.

Mr Wamatinga said in the financial year ending June 2021,  for example, KenGen supplied 8,443 gigawatts hours of electricity, making up 70 per cent of the total power supply, and was paid Sh44.8 billion, translating to 44 per cent.

However, in the same period, the IPPs supplied 3,000 gigawatts hours, which is less than 30 per cent of total power, but were paid over Sh56 billion.

He said if KenGen supplied 100 per cent of power consumed by Kenyans, the amount paid would have been Sh64 billion, saving the country Sh34 billion.

The senator explained that the disparity comes about because KenGen charges Sh5.41 per unit while the IPPs charge between Sh9 and Sh173 per unit and are also paid in US dollars.

“The cost of electricity charged by the IPPs is 30 times compared to what KenGen charges. Further, Kenya Power has to pay for what has been generated by the IPPs regardless of whether it has been consumed or not,” said Mr Wamatinga.