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President Uhuru Kenyatta welcomed the proposal on Wednesday after considering a report submitted by a presidential taskforce on review of power purchase agreements he appointed in March/PSCU

Energy

Govt okays proposal to cut power bills by 33pc beginning December

NAIROBI, Kenya, Sep 29 – The country’s power utility company is expected to lower consumer tariffs by 33 percent in a new proposal adopted by the government.

The move will see power bills reduce by 33 percent, with consumers paying a monthly power bill of Sh500 expected to pay Sh330.

“The consequence of the proposed interventions is that a consumer who previously spent Sh500 per month on electricity shall by December 31, 2021 pay Sh330 per month,” a statement released by the President’s Press Office indicated.

President Uhuru Kenyatta welcomed the proposal on Wednesday after considering a report submitted by a presidential taskforce on a review of power purchase agreements he appointed in March.

“This cost reduction will be achieved through the reduction of the consumer tariffs from an average of Sh24 per kilowatt hour to Sh16 per kilowatt hour which is about two thirds of the current tariff,” State House elaborated.

The taskforce chaired by John Ngumi, Chairperson of the Board of Directors of the Kenya Pipeline Company, also recommended the cancelation of all unconcluded power purchase agreements.

The Kenya Power and Lighting Company (KPLC) will be required to take a leading role in the formulation of power purchase agreements with Independent Power Producers in future under a new framework proposed by the taskforce.

KPLC is also expected undertake a forensic audit on procurement and system losses resulting from heavy fuel oils and list beneficial owners of independent power producers in its annual reports.

Here are recommendations made by the taskforce:

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  1. Review and Renegotiations with Independent Power Producers (IPPs) to secure immediate reduction in Power Purchase Agreements (PPA) tariffs within existing contractual arrangements;
  2. Cancellation with immediate effect of all unconcluded negotiations of Power Purchase Agreements and ensure future PPAs are aligned to the Least Cost Power Development Plan (LCPDP);
  3. Fast-track and deepen the ongoing reforms at KPLC to restructure it into a commercial entity that is both profitable and also capable of delivering efficient and cost-effective electricity supply to all consumers;
  4. KPLC to take the lead in formulation and related PPA procurement of the Least Cost Power Development Plan (LCPDP);
  5. KPLC to institute Due Diligence and Contract Management frameworks for PPA procurement and monitoring along the lines of the drafts provided by the Taskforce;
  6. KPLC to institute one and five-year rolling demand and generation forecasts and associated models;
  7. KPLC to adopt standard PPAs and proposed Government Letters of Support (LOS) along the lines of the drafts provided by the Taskforce;
  8. KPLC to undertake a forensic audit on the procurement and system losses arising from the use of Heavy Fuel Oils (HFOs); and
  9. In line with the constitutional imperative for transparency in the public sector, KPLC’s annual reports should include the names and beneficial ownerships of all IPPs with which it has contractual arrangements.
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