President calls for review of contracts with IPPs

President Uhuru Kenyatta has called for a review of power purchase agreements (PPAs) signed between Kenya Power and independent power producers (IPPs).

In the strongest show of efforts to lower electricity costs, the head of costs threatened to terminate contracts that put consumers at a disadvantage.

Speaking at the inaugural State House Energy Summit, President Uhuru said IPPs must be challenged to be cost effect instead of transferring high costs to power consumers.

“Those arrangements that are not cost effective to the Kenyan people must be terminated, yes in a legal manner, but in the shortest possible time,” President Uhuru said.

The move is expected to lift the veil on how the PPAs are designed to make it more transparent and cost effective for consumers.

“I believe there has been a lot of cloud in that particular manner resulting in us signing agreements that have cost this country heavily,” he stressed adding that it didn’t mean the government want willing to work with the private sector.

The government has been keen to increase the country’s installed power capacity to 5,000 megawatts. This has seen partnerships with IPPs to fill in the vacuum by state owned power generator KenGen.

Most independent power producers rely on diesel power generators which remains costly. Most IPPs have 25 year long contracts which continue to make electricity costs high.

President Kenyatta said IPPs must be competitive to pass benefits on to consumers.

“That’s why people are saying you need competition because they believe maybe you are not running your institutions in the most cost effective manner and transferring benefits to the consumer,” he said.