MPs grill Kenya Power management over power purchase deals


MPs grill Kenya Power management over power purchase deals
Kenya Power Managing Director Bernard Ngugi appears before the Public Investments Committee (PIC) on June 15, 2021.

Parliament is demanding the full disclosure of details of contracts independent power producers have signed with Kenya Power.

This even as a task force appointed by President Uhuru Kenyatta to review power purchase agreements signed by the State power distributor continues with its work.

While appearing before the Public Investments Committee (PIC) on Tuesday, the Kenya Power management led by Managing Director Bernard Ngugi defended the rationale used in signing contracts with the independent powers.

“I don’t understand if a company has dimmed energy like Lake Turkana is a windmill, Kenya has hydro, why is it not telling you that our water is passing and energy is being produced and you still have to pay whether you consume it or not?” Posed Abdullswamad Sherrif, Chairperson, PIC.

“When you are coming to do an investment yourself you must do a return on those projects hence the reason you have capacity charges and deemed energy,” responded Mr. Ngugi.

The committee reckoned that the current arrangement favours the producers more as they questioned the legal input in the process.

PIC member and Tinderet MP Julius Melly questioned: “Before you have these agreements signed, there is always a government legal adviser and an officer from the audit office, do you have these agreements deposited with you or have you ever seen some of these agreements?”

The Kenya Power MD stated, “The AG is not involved in the PPAs (Power Purchase Agreements) but there is a process of initiation up to the point of signing a PPA…where the AG is involved is at the point of advising or giving a legal opinion on the letter of support.”

Since 2016, the government has made several attempts to renegotiate Power Purchase Agreements (PPAs) with power producers.

Such a review will affect operational as well as planned agreements. There are currently 32 negotiated and approved agreements.

In late March this year, President Kenyatta appointed a task force to review all PPAs signed between the utility firm and power producers, with a view of taming high energy costs. The team has six months to deliver its work.

The PIC reckoned a review of the current power purchase contracts will offer financial relief to Kenya Power as well as help bring down high power bills for consumers.

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