Energy Ministry halts process to review power sector contracts

Plans to renegotiate contracts signed between Kenya Power and electricity producers with the expectations of bringing down the cost of power has hit a hitch.

This is after the ministry disbanded a team that was to steer the process, shortly after it was formed.

Energy Cabinet Secretary Charles Keter had on Friday gazetted a 13-member committee to renegotiate the Power Purchase Agreements (PPAs) with firms that generate and sell electricity to Kenya Power, and how much they are paid.

This was expected to result in lowering the cost of energy in the country - a key objective for a regime that is trying to spur the manufacturing industry and achieve universal access to electricity.

The committee would however be short-lived, with the CS degazetting the team on Monday, three days later.

“It is notified for the general information of the public that the CS for Energy has revoked the appointment of the Standing Committee on the Review and Re-negotiations of PPAs that was appointed (through a gazette notice on) March 12, 2021,” said Keter in Monday’s notice.

Keter on Tuesday told The Standard that the ministry was taking a step back to ensure all stakeholders are involved.

“We are seeking to involve the Treasury, the Attorney General’s office and senior officials in the sector. The task force will be in office for three to six months and are expected to come up with recommendations that will cushion the energy sector,” Keter stated.

According to the terms of reference of the yet to be gazetted task force, the CS said the new team will focus on the Public-Private Partnership (PPPs) and re-negotiate deals as well as other issues that the power sector is grappling with.

“The team will also consider the dates of commissioning of the projects. They will make recommendations to a report to be subjected to me,” he said.

This is the second time the government has tried to wiggle out of some of the costly PPAs.

The Ministry in 2016 attempted to review PPAs that thermal generators have with KPLC but the task force advised the State not to review or terminate the contracts.

The committee, which submitted a report to the Ministry in 2018, said it would be cheaper to let the PPAs lapse.

The latest plan to review the contracts comes after the Auditor General raised concerns about the nature of contracts that KPLC has with power producers.

The deal requires Kenya Power to pay firms even when they don’t supply power.