Cabinet approve contracting of new Independent Power Producers (IPPs)
The cabinet has approved the contracting of new Independent Power Producers (IPPs) with an aim of increasing power generation in the country.
According to the Cabinet, the decision was arrived due to the current drought situation in the country that has reduced dispatch of hydroelectric power.
“In addressing the challenges of realising sustainable energy mix occasioned by the prolonged drought, Cabinet approved the lifting of the moratorium on PPAs as a way of enhancing the nation’s energy security through opening up the energy sector for continued investments,” read a cabinet dispatch.
The move comes after recommendations by the task force recommended by former President Uhuru Kenyatta to review PPAs signed between Kenya Power and all electricity generators in 2021.
This came after revelations that Kenya Power had sunk into financial blackouts and debts in the financial year ended June the same year after signing expensive Power Purchase Agreements (PPAs) and that the installed capacity was greater than the peak demand.
In June 2021, while appearing before the National Assembly’s Public Investments Committee (PIC), former Kenya Power Managing Director Bernard Ngugi declined to reveal the owners of beneficiary firms and 17 Power Purchase Agreements (PPAs) that committed the loss making entity to the shady dealings.
“Power Purchase Agreements have contractual provisions which would require more time to obtain consent and authorisation from court processes because of confidentiality clauses such as Non-Disclosure Agreements,” Ngugi said.
According to Kenya Power records, some of the listed independent power producers in the country are, Iberafrica Power, Tsavo Power, Thika Power, BioJuole Kenya Limited, Mumias-Cogeneration and OrPower 4.
Others are Rabai Power, Imenti Tea Factory Hydro, Gikira Hydro, Triumph Power, Gulf Power, and Regen-Terem Hydro.
Kenya Power’s electricity purchase costs stood at about Sh82.1billion in the financial year 2020, accounting for over half of its operating costs.
