Executive Order through President Uhuru on electricity welcome
Kenyans are a happier lot after a presidential taskforce on the review of Power Purchase Agreements (PPAs) yesterday submitted recommendations that could see the cost of electricity dip by 33 per cent come December.
If it comes to pass, the move will see the cost of electricity drop from Sh24 kilowatt hours (Kw/h) to Sh16 effectively cushioning consumers from the high cost of living that has spiked in recent times.
The reduction is expected to cushion manufacturers who were opting for other means of getting electricity including investing in solar power.
Apart from the increasing taxes, it is the skewed costs under the PPAs that have been blamed for the high cost of power that has made local goods uncompetitive.
A typical PPA sees a power producer get paid for electricity produced, even if Kenya Power cannot sell it to consumers, just because the agreement says so.
But with the President’s Executive Order cancelling, with immediate effect, all unconcluded negotiations of PPA’s and ordering that future agreements with Independent Power Producers (IPPS), be aligned to the Least Cost Power Development Plan, the future of these firms looks uncertain.
Most importantly, the once profitable Kenya Power must put its house in order and fast-track ongoing reforms to restructure its processes to become a commercial entity, that is capable of delivering efficient and cost-effective electricity to all consumers.
Further, lack of proper demand forecasting by Kenya Power was also fingered as a risk, which causes allocation imbalances between Kenya Power and IPPs coupled with uncoordinated institutional architecture.
Other expectations from the committee include instituting one and five-year rolling demand and generation forecasts and associated models; and undertaking a forensic audit on the procurement and system losses arising from the use of Heavy Fuel Oils.
Uhuru’s order effectively puts to rest recent efforts by parliamentarians to convince IPP’s to renegotiate their agreements with Kenya Power, a task that has taken time and dragged on for ages with the suppliers unwilling to renegotiate.
Whereas there is the possibility of the suppliers to move to court, the orders should not be in vain.
There is bound to be resistance but it is the right thing. We call on all those who sit on the negotiating table to have the interest of the mwananchi as a first choice. Skewed agreements will only benefit the suppliers and ruin industries and lives of many.