CS Keter sets up team to review energy tariffs

The Ministry of Energy has set up an eight member committee to review all power purchase agreements signed with independent power producers (IPPs).

This follows a presidential directive back in June that all contracts be reviewed after it emerged that Kenyans may be paying for costly power.

Energy Cabinet Secretary Charles Keter said there is a need to review the contracts to ensure the government is getting value for money from the tariffs charged and whether the IPPs are able to meet the power demands.

“The mandate of the team is to check and review and see if this power plant was signed for 25 years we are only paying for capacity charge, we stopped using it after ten years do we have an exit clause,” Mr Keter said.

The Ministry has at the same time suspended the processing of any further feed in tariff expressions of interest pending the conclusion of the review.

Members of the review team will be drawn from the Kenya Private Sector Alliance, KenGen, the Energy Regulatory Commission as well as commercial lawyers.

Of main concern is that independent power producers are paid a capacity fee even when the power plant stops producing power.

Kenya began contracting IPPs in the late 90’s as part of efforts to speed up electricity generation.

State owned Kenya Electricity Generating Company (KenGen) is the country’s largest power producer with an installed capacity of 1,623 megawatts.

Kenya has a mix of geothermal, hydro and wind power production, but it is the expensive diesel fired power plants that continue to drive up electricity bills.

“We want to find the most cost effective in terms of least cost that is chargeable to the mwananchi. The end goal is to review all and see which is the best that will make the power tariff lower than it is now,” the CS said.

The review comes at a time the ministry is set to introduce an auctioning model for electricity generating contacts in an effort of lowering power tariffs.

The shift in policy is expected to give the Ministry of Energy greater control in planning energy projects rather than having private investors determining the pricing framework.