MPs direct Energy CS to develop policy within a year for renegotiating power deals

MPs direct Energy CS to develop policy within a year for renegotiating power deals
MPs direct Energy CS to develop policy within a year for renegotiating power deals - Energy Cabinet Secretary Opiyo Wandayi before the National Assembly on February 25, 2025. (Photo: National Assembly)
Energy Cabinet Secretary Opiyo Wandayi before the National Assembly on February 25, 2025. (Photo: National Assembly)

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The National Assembly Energy Committee said a reduction in the prices charged by big electricity producers would give Kenya Power room to lower electricity bills without affecting its financial stability.

Members of Parliament have directed Energy and Petroleum Cabinet Secretary Opiyo Wandayi to develop a policy that will guide the government’s plan to renegotiate electricity agreements with major power producers in a bid to lower wholesale prices and reduce the cost of power for consumers.
The National Assembly Energy Committee said a reduction in the prices charged by big electricity producers would give Kenya Power room to lower electricity bills without affecting its financial stability.
The committee wants the policy to provide a framework for affordable electricity procurement, regular review of power purchase agreements (PPAs) and competitive sourcing of electricity generation.

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“The Cabinet Secretary for Energy and Petroleum shall, within 12 months of the adoption of this report, revise the policy to provide a clear framework for least-cost power procurement, periodic review of power purchase agreements (PPAs) and competitive procurement of electricity generation,” the committee said in the report.
“The framework shall promote transparency, affordability and value for money, while supporting the government’s ongoing efforts to reduce the cost of electricity through the renegotiation of legacy PPAs, without compromising security of supply, contractual obligations or investor confidence.”
The legislators said the proposed changes are aimed at supporting ongoing government efforts to bring down electricity costs while ensuring that power supply remains stable and contractual obligations are respected.

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However, the plan faces questions over its implementation because existing power purchase agreements are legally binding. Any forced changes to the contracts could expose the government to legal disputes from power producers.
Electricity prices have reduced over the past year, with the government seeking to maintain the decline as it works to ease pressure on the cost of living ahead of next year’s General Election.
Official data shows that 200 kilowatt-hours (kWh) of electricity cost an average of Sh5,476.34 last month, compared to Sh5,738.52 during the same period a year earlier.
Independent power producers (IPPs) have previously rejected attempts by the government to unilaterally lower wholesale electricity tariffs, arguing that such a move would affect their earnings.
In 2022, the government attempted to push IPPs to reduce their wholesale tariffs as part of efforts to enable Kenya Power to cut electricity prices by 15 per cent.

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