President Uhuru Kenyatta orders review of Kenya Power contracts to cut power bills

Kenya Power has four months to review all power purchase deals with independent producers, paving the way for a reduction in the cost of electricity by a third.

Renegotiating the energy prices and other terms downwards by the end of December is one of the recommendations in a report presented to President Uhuru Kenyatta on Wednesday.

The electricity distributor has also been barred from finalising any un-concluded power purchase deal or renewing expiring contracts with the producers in the wake of a rise in power bills that hit a 38-month high in August.

President Kenyatta appointed the taskforce in March after it emerged that Kenya Power had signed contracts committing it to take more electricity than it can sell. 

The flawed contracts have exposed Kenya Power to pay onerous capacity charges to energy producers even when their plants are idle.

“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,” reads a statement from State House.

“The President has also examined and welcomed the recommendations of the Taskforce that establish a path towards the reduction of the cost of electricity by over 33 percent within four months.”

A review of the deals will see consumers who paid an average of Sh500 per month pay Sh330, a relief to millions of households still grappling with reduced spending power and high costs of kerosene, diesel and petrol.

Lowering fixed charges in the energy contracts will offer Kenya Power financial relief and bring down power bills for consumers.

Power bills this month hit a 38-month high on the increase in the fuel surcharge levied on power tariffs.
Fuel Cost Charge (FCC) for September increased to Sh3.88 from Sh3.77 last month— the highest since July 2018.

Other recommendations include a forensic audit on the procurement and system losses arising from the use of heavy fuel oils and publishing of owners and beneficiaries of all independent generators the utility firm has contracts with in its annual company reports.