Senators to probe 11 independent power producers' electricity supply contracts

Eleven independent power producers (IPPs) have been summoned by MPs as investigations into contracts signed by the firms to supply electricity to Kenya Power begin.

The lawmakers want the 11 firms to explain at how much they are selling electricity to Kenya Power and why they are being paid in foreign currencies, mainly in US dollars and Euros.

The development comes after the Electricity Consumers Society of Kenya (ECSK) decried the skewed contracts signed between Kenya and the IPPs.

Appearing before the Senate Energy committee chaired by Nyeri Senator Wahome Wamatinga, ECSK executive director Isaac Ndereba questioned why IPPs are selling their power at varied costs, with some supplying at Sh26/kWh yet KenGen is selling at Sh5/kWh.

While only filling the deficit for national consumption of about 30 per cent, Mr asked why the IPPs must be paid in foreign currencies yet KenGen, the largest producer of power, supplies Kenya Power with electricity that is paid in local currency.

“The committee should find out why these IPPs signed the contracts to be paid in foreign currencies and why the same is a charge being loaded to the consumer,” said Mr Ndereba.

According to the audited accounts for the financial year ended June 2021, KenGen supplied a total of 8,443GWh of electricity to Kenya Power and was paid Sh44.8 billion. On the other hand, the IPPs only supplied 3,000GWh, which translates to about 30 per cent of the total power, but were paid more than Sh56 billion.

Mr Wamatinga argued that if KenGen was to supply 100 per cent of the power consumed in the country, the amount paid would be Sh64 billion resulting in savings of Sh37.1 billion to Kenya Power. He said Kenyans have been exploited for a long time through the high cost of electricity, adding that those found culpable of increasing the electricity cost for their own benefit must be brought to book.

The current average cost of electricity per unit is Sh25, an amount they say can only allow a consumer to get 40 units for Sh1,000.

“We must find out why the IPPs signed skewed contracts for their selfish gains at the expense of the ordinary Kenyans. This is unacceptable and we must get to the root of this,” said Mr Wamatinga.

Laikipia County Woman Rep Jane Kagiri, in a motion before the National Assembly, wondered why Kenya Power procures electricity from the IPPs at unregulated rates, saying there is a need to regulate all the IPPs and publicise their locations, stakeholders, directors, management, addresses and agreements entered into with Kenya Power.

She argued that Kenya Power has in the past procured a larger quantity of power from the IPPs at a higher cost rather than from KenGen, leading to a higher cost of power.

Policy formulation

Consequently, she said, there is a need to put in place policies, strategies and regulatory measures to moderate the cost of electricity and enable access to energy by all, particularly in the manufacturing sector, to ease the cost of production.

Ms Kagiri called for investigations to be launched into the operations of Kenya Power in relation to agreements entered into with IPPs, factors affecting the cost of electricity, including over-reliance on IPPs against available renewables and other energy sources, and measures to reduce it.

“The Ministry of Energy and Kenya Power should develop suitable strategies for engagements with the IPPs to provide relief to electricity consumers and ensure the long-term viability and sustainability of the energy sector,” she said.