- Ndung’u said primary issuer of Government Support Measures which includes letters of support to IPPs is Office of the Attorney General.
- Director General for Private Public Partnerships, Chris Kirigua cited the need to review the PPAs.
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National Treasury Cabinet Secretary Njuguna Ndung'u has contradicted Attorney General Justin Muturi over the latter’s involvement in Power Purchase Agreements.
Ndung’u told the Energy Committee that the Office of the Attorney General makes legal clearance for letters of support to Independent Power Producers (IPPs).
The statement contradicted the Attorney General's assertion that his office wasn't involved in the signing of agreements between PPAs and Kenya Power.
Ndung'u told legislators that the primary issuer of Government Support Measures (GSMs) which includes the letters of support to IPPs is the Office of the Attorney General.
While justifying the issuance of letters of support to IPPs, Ndung'u told the Committee they serve as a contingent liability.
"The letter of support is a mechanism used to protect the government as well the private sector," Ndung'u explained.
The committee led by Mwala MP Vincent Musyoka Kawaya has been inquiring into the high cost of electricity in the country.
Appearing before the committee on October 12, 2023, Ndung’u demanded that contracts entered by Kenya Power and IPPs be availed to him.
Muturi said the agreements were signed without the input or advice of the Office of the Attorney General.
Muturi said his office needs to know the consequences of renegotiating or terminating the contracts.
"We are just being told that it will be expensive to terminate the contracts but nobody is telling us how much. We must know the consequences of terminating these contracts," he said.
The cost of power that IPPs agree with the government has been, in most cases, higher than the cost of electricity produced by state-owned firms like KenGen.
On Wednesday, the Director General for Private Public Partnerships, Chris Kirigua-who had accompanied Ndung’u cited the need to review the PPAs.
"There is a need for a review of the contracts. We need to look at the contracts and what was provided in the beginning. If it is established that something is wrong, it shouldn't be tolerated," Kirigua said.
MPs were also concerned about the various taxation measures and levies impacting the overall cost of power and how the same can be managed to offer relief to Kenyans.
In his response, Ndung'u informed the committee that the only national tax charged on electricity is VAT at the rate of 16 per cent and that removal of the same will introduce discrimination in the VAT tax regime.