The government is seeking to increase private sector participation in the supply of water to households in an attempt to increase access to the essential commodity.
President William Ruto yesterday told Parliament that his administration is looking to enter into water purchase agreements with private firms, which will then develop water supply infrastructure and ease the supply of water to homes.
The agreements are expected to mirror the contracts in the power sector that electricity producers have with Kenya Power, which have been a subject of controversy and blamed for high cost of electricity.
Other than the requirement to pay the producers even in instances where they do not supply electricity to Kenya Power – costs that are passed to consumers – the Power Purchase Agreements (PPAs) are long term, lasting on average 20 years. Short of legroom to borrow funds for infrastructure development, President Ruto said the government will pursue Public Private Partnerships (PPP) to increase access to water.
“In order to achieve our target of raising access to water from the current 60 per cent to 80 per cent, Sh500 billion is required. The government can provide this gradually, but the private sector can mobilise it all at once. We will thus adopt a PPP framework by entering into water purchase agreements with investors,” Dr Ruto told a joint sitting of parliamentarians.
“I have already instructed the PPP Unit at the National Treasury to work on the regulations that will facilitate the mechanism like we have on our energy sector for investors to work with us on a formula under the Water Purchase Agreement instrument. This way, we will achieve water for all in under a decade.”
The power sector PPAs have been so problematic that the Jubilee administration severally tried to look for a way out of the contracts, with its latest effort being last year’s Presidential Taskforce on Review of the PPAs.
The taskforce, formed in March and reporting back in September, made recommendations including that Kenya Power, together with the Energy Ministry, renegotiate the contracts.
They have, however, been unsuccessful as the IPPs opposed the proposal amid concerns that arm-twisting the power producers to open their contracts for renegotiation could result in court battles.
Power players have justified the structure of the PPAs, noting that Kenya Power is the only customer for the electricity producers and hence the need for certain guarantees. These include the requirement to pay what is termed as capacity charges – which is money power plant owners earn whether they supply power to the grid or not as long as their plants are available to push power to the grid. It is in addition to money paid whenever they supply electricity to the grid.
Ruto said the government would look into ways of empowering areas that are yet to be connected to the national electricity grid. “We shall facilitate the development of innovative and effective modalities to provide better off-grid systems, including enabling consumers to form small cooperatives for that purpose.