Gov’t Kicks Off Talks With Independent Power Producers Amidst Reduction Of Cost Of Power

NAIROBI,Kenya, Mar, 27 – Months after a presidential taskforce made several recommendations regarding radical changes within the country’s energy sector that has since seen the cost of power reduced by 15 per cent in phase one of the proposed plan, formal engagements have resumed between the government and Independent Power Producers.

The renegotiations of the Power Purchase Agreements (2021) is part of presidents Uhuru Kenyatta’s plans to ensure Kenyans receive clean, reliable and sustainable power at a low cost.

“The negotiation process has been foregrounded by extensive preparatory work across all of government. In addition, the Ministry of Energy has engaged in listening sessions with 77 IPPs that have outlined issues of concern to both sides,” read a statement from the ministry of Energy.

The government has desired the negotiations and ongoing reforms within the energy sector as imperative, particularly after it successfully implemented the reduction of power cost by 15 per cent in January 2022.

The second tranche of another 15 per cent reduction in power cost is expected to implemented soon.

“This step has had significant impact. While all tariff categories benefited from the reduced tariff, low-tier customers had decreases in power costs of up to 23 per cent,”

“There has also been extensive consultations with energy sector experts, regulators, legal and financial advisors, as well as other stakeholders, in-country and beyond. All together, these conversations have established good faith, forged comfort and clarified a pathway to successful negotiations in the shortest time possible,” read the statement.

Already a report by the Kenya Association of Manufacturers indicated a 10 per cent saving in manufacturing cost.

“Most recently, the KPLC announced KSh3.82 billion profit after tax for the half-year to December 31, 2021, as did KenGen’s 7 per cent increase in the profit before tax in the same period. In addition, the Energy and Petroleum Statistics Report 2021, EPRA showed that the country continued to lead in electricity connections across East Africa,”

The ongoing reforms is expected to ensure sustainable performance and optimization while launching Kenya into green growth, which will translate in improved global competitiveness, dignified jobs and enable Kenya to contribute to the reduction in carbon emissions.

In October 2020, President Kenyatta had directed the Ministry to fast-track the implementation of the recommendations of the Presidential Taskforce on Power Purchase Agreements.

The government in October froze all pending and ongoing contracts with independent power producers as the utility firm reviews the existing agreements to lower the cost of electricity in the country.