In a significant move aimed at reshaping Kenya’s energy landscape, Members of Parliament (MPs) are pushing forward with a proposal to dismantle the monopoly held by Kenya Power. The plan, gaining momentum, seeks to introduce Independent Power Producers (IPPs) into the market, allowing them to directly sell tokens to consumers. The primary goals are to lower the cost of electricity and enhance competition within the sector.
At present, the National Assembly’s Energy Committee is actively engaged in Mombasa, working on a comprehensive report that outlines strategies to address the high cost of electricity prevalent in the country.
According to insiders, the core objective of this proposal is to empower consumers by providing them with choices regarding their energy sources. Under this plan, IPPs would have a direct line of communication with customers, enabling them to establish their billing systems. This move is anticipated to foster a competitive environment, encouraging better pricing and service offerings.
If approved, consumers would have the liberty to decide between procuring electricity from Kenya Power or IPPs, selecting the option that aligns with their preferences and budget. Simultaneously, the committee is scrutinizing the possibility of terminating costly contracts between Kenya Power and IPPs, which currently incur an annual expense of Sh23 billion.
The Energy and Petroleum Regulatory Authority (EPRA) is contributing to this transformation by crafting regulations that facilitate direct power sales. This includes introducing a specialized licensing framework tailored specifically for IPPs, ensuring fairness and competition in the sector.
Earlier in the year, IPPs initiated a proposal to directly sell electricity to consumers, thereby challenging Kenya Power’s monopoly. The proposal is grounded in the Energy Act of 2019, which promotes a competitive energy market.
IPPs argue that the existing model, where they sell power at wholesale rates to Kenya Power, only to repurchase it at retail prices, hampers innovation and limits their ability to offer better deals directly to end consumers.
The fate of this proposal rests with the MPs, who will discuss it when the House resumes sessions on September 26. If adopted, consumers could anticipate a transformed energy landscape, marked by choice, affordability, and healthy competition.
Photo Source : Google
By: Montel Kamau
Serrari Financial Analyst
30th August, 2023
