State wants power investors to show goodwill in tariffs talks

In December last year, Uhuru ordered an immediate 15 per cent drop in power tariffs.

In Summary

•In December last year, President Uhuru Kenyatta ordered an immediate 15 per cent drop in power tariffs. 

•A further 15 per cent reduction was to be realized in the first quarter of this year by renegotiating power purchase agreements with Independent Power Producers.

The Lake Turkana Wind Power Project in Loyangalani, Marsabit County.
The Lake Turkana Wind Power Project in Loyangalani, Marsabit County.
Image: JACK OWUOR

The government has reiterated its commitment to reducing the cost of power and asked independent power producers to demonstrate good faith in negotiations.

Ministry of Energy spoke days after Lake Turkana Wind Power publicly announced its unwillingness to allow a reduction of electricity tariffs by a further 15 per cent.

In December last year, President Uhuru Kenyatta ordered an immediate 15 per cent drop in power tariffs. 

A further 15 per cent reduction was to be realized in the first quarter of this year by renegotiating power purchase agreements with Independent Power Producers.

However, on Thursday, Lake Turkana Wind Power ruled out any reduction saying the move would hurt its cash flow and financial obligations.

But in a rejoinder, the government said all investors must demonstrate goodwill.

“From the beginning of the reform process in general and the re-negotiation of PPAs, the government has and continues to act in a transparent manner,” said the Ministry headed by Monica Juma.

“We have engaged all independent power producers in open discussions, clarifying both our intent and modality. We have demonstrated goodwill towards all investors in the sector and expect reciprocity of the same by all investors, including Lake Turkana Wind Power (LTWP).”

The government said they are ready and willing and ready to engage even the financiers of the power producers to build what it termed “comfort and achieve mutually beneficial outcomes”.

LTWP is the biggest wind power project in Africa. It accounts for 17 per cent of the total installed power in Kenya and has the capacity to power up to one million homes.

"Having delivered an initial 15% reduction in power tariffs through across-government measures, the delivery of the second tranche of the 15% power reductions, from the renegotiation of Power Purchase Agreements (PPAs) is not only a strategic objective but an imperative for the growth of Kenya’s economy," the Energy Ministry said in a statement on Thursday, May 12.

Considering the rising cost of living, the State said it has had deliberations with Independent Power Producers to have power tariffs prices reduced to boost the economy.

The reduction of the cost of power is part of President Uhuru Kenyatta’s strategy to reduce the cost of living.

Just recently, a tough-talking President fired a warning shot to oil marketers against exporting subsidized fuel at a time global oil prices are on the rise.

The Head of State termed the exportation of subsidized fuel as economic sabotage and vowed dire consequences for the culprits.