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Loss making Kenya Power wants EPRA out of energy deals

Kenya Power now wants Energy and Petroleum Regulatory Authority (EPRA) removed from power purchase agreement (PPA) negotiations to reduce oversupply of electricity in the market.

The electricity retailer has been engaged in battles with the energy sector regulator over delayed revision of electricity tariffs. It wants a new body established to preside over signing of power deals which have overburdened it with excess supply that must be paid for.

In a lengthy letter to the Ministry of Energy, Kenya Power trashed Epra’s approach to address the challenge of excess supply through delayed project commercialisation dates for the already signed PPAs.

“The sectors’ approach towards addressing the issue of excess generation as recently guided by EPRA, is shifting of commercial operation dates and introductions to take and pay clauses in PPAs,” the letter reads in part.

Kenya’s electricity distributor says EPRA also expressed fears that the country had overcommitted to power generators which may not be sustainable under the stagnated tariffs and reduced demand for electricity.

It further accused Epra of allowing 34 PPAs which are expected to inject about 1,891 megawatts into the national grid within the next five years.

Kenya Power said the move will worsen the situation since it will be forced to pay for the energy generated even if it will not be consumed under the take-or-pay deals.

The loss making power retailer is now pleading for the formation of another body to engage power generators in signing of new deals. Kenya Power has not been pleased with the way Epra has allowed such deals to be signed lately.

Kenya Powers request was conveyed to the Ministry through Energy Principal Secretary Joseph Njoroge.

“Clearly a different model is required that will deliver revenues for these projects at the same time reduce retail tariffs as per government policy. One option is to create a separate entity dedicated to entering into PPAs with generators on behalf of the government,” read part of the letter by Njoroge.


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