Finally, power firms end feud

June 4, 2009
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, NAIROBI, Kenya, June 4 – The long standing dispute between Kenya Power and Lighting Company (KPLC) and the Kenya Electricity Generating Company (KenGen) over tariffs came to an end on Thursday with the signing of a new Power Purchase Agreements between the two companies.

KenGen Managing Director Eddy Njoroge said the new agreements will be based on the mode of power generation and noted that they mark the close of the current Interim Power Purchase Agreements signed 10 years ago.

“The power agreement is for a period of 20 years and the tariff will be different for every mode of transmission,” Mr Njoroge explained.

He said the yield earn for Kengen would be Sh2.42 per unit which was a slight improvement from the Sh2.36.

“Retail tariff rates will not go up and more so what this agreement means is that on our part we will ensure available supply while KPLC will on the other hand sustain effective transmission thus a win situation for everyone; Kengen, KPLC and our customers,” Mr Njoroge said.

However KPLC Managing Director Engineer Joseph Njoroge noted that while the tariff rate will remain constant the fuel levy cost in a customer’s bill will change in line with the products market price.

“You all know we have a challenge at the moment. The hydro dams have not reached the level that we expect them to reach so we may hugely depend on thermal to sustain our supply,” Engineer Njoroge observed.

The Power Purchase Agreements are the culmination of negotiations, which started in April 2007, and are based on a tariff study undertaken by the then Electricity Regulatory Board (ERB) now the Electricity Regulatory Commission (ERC).

However the new proposed rates were not agreeable to KenGen then and so it went to court over the issue.

The dispute was referred for arbitration after the parties agreed to settle out of court.

In the meantime, KenGen was ordered to bill KPLC at a Sh2.36 rate which applied before the disputed rate which was at Sh2.44.

The move that was later attributed to KenGen’s announcement of a 33 percent drop in half year profits to Sh1.74 billion while KPLC half year profits grew by 49 percent to Sh2.1 billion.

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