Lake Turkana Wind Power dims hope of agreeing to reduce electricity tariffs

Lake Turkana Wind Power (LTWP). [Ali Abdi/Standard]

The government might be off to a rocky start in its bid to offer Kenyans the second tranche of a reduction in the cost of electricity.

This is after one of the major power producers indicated that it might not revise its tariff downwards.

Lake Turkana Wind Power (LTWP), which operates the 310-megawatt (MW) power plant in Marsabit County, said a cut on its tariff would put it in a "financially complicated situation."

The firm said such a move would also put it at odds with its lenders.

LTWP said it has not received a formal invite from the Energy Ministry to start renegotiation of its Power Purchase Agreement (PPA) with Kenya Power.

The firm echoes statements by other Independent Power Producers (IPPs) that have voiced concerns about the planned renegotiation.

The government implemented a 15 per cent cut on power costs in January, promising a further 15 per cent reduction by the end of the quarter to March.

This followed a directive by President Uhuru Kenyatta for a 30 per cent reduction in electricity prices in two tranches of 15 per cent each.

“The government’s position on reviewing the tariff as embedded in the power sector PPAs is clear but most certainly not agreeable to LTWP… a straight slash on our tariff is not on the cards,” said LTWP Chief Executive Phylip Leferink.

Even then, he added, the company had not received an invitation for talks from the Energy ministry but noted it has in past attended what the ministry calls "listening committees." LTWP is one of the largest electricity generators in the country and was last year the second-highest-paid power producer after State-owned KenGen.