Kenya Power has begun negotiations around a deal to review power purchase agreements (PPAs) signed over the years to further cut electricity bills for homes and businesses by 15 % in three months to June.
The Ministry of Energy said it opted for talks over forcing the independent power producers (IPPs) to lower tariffs in the wake of opposition from the foreign firms in the planned review.
“A formal engagement between the Government of Kenya and independent power producers commenced within the framework of the ongoing wide-ranging reforms in the energy sector. These conversations have established good faith, forged comfort and clarified a pathway to successful negotiations in the shortest time possible.” the Ministry of Energy in a statement.
Earlier this year, Kenya Power cut retail tariffs hinged on its lowering system losses — the share of electricity bought from generators such as KenGen that does not reach homes and businesses due to power theft and leakages from an aging network.
KPLC is looking forward to a similar cut in this review based on the review of PPAs after a task force appointed by President Uhuru Kenyatta found a huge disparity between the tariffs charged by the main power producer KenGen and IPPs.
The IPPs, which are owned by powerful institutions like the World Bank, opposed a unilateral push to lower the cost at which they sell electricity to Kenya Power, setting the stage for a legal battle
The 15 % cut implemented in January saw the cost of power go down from Sh24 per kilowatt to Sh20.4 per kilowatt. This is expected to decline even further by another 15 per cent to Sh16 per unit by end of this review when the second phase of the reduction will be implemented.
This reduction is expected to boost social-economic growth by reducing the cost of living, putting more money in Kenyans’ pockets and reducing the cost of doing business.