• The Ministry of Energy & Petroleum had in February established a joint PPA Negotiations Committee to oversee the renegotiation of Power Purchase Agreements (PPAs).
• According to Kenya Power, during the review period, significant progress was made in the renegotiations.
Image: EZEKIEL AMING'A
Kenya Power has cut down electricity purchases from independent producers and instead upped its acquisitions in Rural Electrification and Renewable Energy Corporation (Rerec) and KenGen.
So far the government has already renegotiated 26 contracts with the Independent Power Producers (IPPs) with a majority waiting for the final go ahead from Energy Petroleum and Regulatory Authority.
Kenya Power Managing Director Joseph Siror, in submissions to the National Assembly Committee on Implementation, said that in the 2023-24 financial year the energy purchased from IPPs dropped to 32 per cent of the total purchases.
In the 2022-23 period the utility firm had acquired 36 per cent of total dispatched energy from the IPPs.
“This is also the trend for the current financial year 2023 to May 2024 showing energy purchased from IPPs being at 32 per cent with the rest of the energy purchased from KenGen and REREC,” said Siror.
The Ministry of Energy & Petroleum in February established a joint PPA Negotiations Committee to oversee the renegotiation of Power Purchase Agreements (PPAs).
The committee's primary focus was on renegotiating projects with signed PPAs that had not yet commenced construction, as well as those where construction was completed but the PPAs had lapsed.
According to Kenya Power, during the review period, significant progress was made in the renegotiations.
“Eight PPAs have been successfully renegotiated, and approvals are currently being sought from the Energy and Petroleum Regulatory Authority (EPRA) and the National Treasury. These agreements represent a total firm capacity of 28.88 MW,” Siror told the Peter Njoroge led committee.
Two PPAs, Marco Borero and DWA, have already received EPRA approvals and are now awaiting approval from the National Treasury.
Additionally, three PPAs involving KTDA Metumi, KTDA Chania, and KTDA Nyakwana have been renegotiated and forwarded to EPRA for approval.
The committee has also concluded two energy exchange agreements with Uganda Electricity Transmission Company (UETCL) and Tanzania Electric Supply Company (TANESCO), which have been submitted to EPRA and the Attorney General for approval.
Two other PPAs, KenGen Small Hydros and Orpower 22 Ltd, have been finalised, with the KPLC board granting approval. These agreements will be sent to EPRA once all parties complete initialling.
Seven more PPAs have renegotiations complete and drafting under finalisation by parties with total capacity of 66.9 MW.
They include Kleen Energy Limited, PTSL Gikira Ltd, Iberafrica Power (EA) Ltd, KTDA Lower Nyamindi, KTDA South Mara, KTDA Settet (Kipsanoi) and KTDA Iraru.
KenGen Olkaria 1 and rehabilitated wellhead leasing also have renegotiation ongoing, with key PPA terms yet to be agreed upon by the parties with a total capacity of 121.64MW.
In 2021 former president Uhuru Kenyatta’s task force on review of PPAs, submitted froze procurement of new IPPs.
This means that for just over three years now, no new PPAs with IPPs have been signed.
Power purchase deals between Kenya Power and private electricity producers have come under scrutiny in recent years given the high prices offered compared to those of Kenya Electricity Generating Company (KenGen).
The submissions followed a motion by Kagiri, MP Jane Wangechi who sought the implementation status on operations of Kenya Power & Lighting in relation to agreements with IPPs.