The Cabinet has approved the restructuring of Kenya Power's balance sheet and the adjustment of the board to reflect its shareholding.
The move is aimed at restoring profitability and financial sustainability by addressing loan balances and the liquidity gap.
"In line with the Kenya Kwanza Bottom-Up Economic Transformation Agenda, the composition of Kenya Power's Board will be adjusted to reflect its shareholding," the Cabinet said in a dispatch after its fifth meeting held at State House, Nairobi.
President William Ruto chaired the meeting.
Kenya Power is currently facing queries on why the management has not achieved any meaningful results from the initiatives undertaken to turn the utility firm around to profitability.
MPs want to conduct a review into the high capacity charge on power purchase agreements which are blamed for costly electricity in the country.
The company is also being probed over the Sh5.3 per KWh purchase of power from KenGen while it costs the company an average Sh15.5 per KWh from other Independent Power Producers.
The Cabinet has also endorsed proposed amendments to the Water Act of 2016, which will introduce Public Private Partnerships (PPPs) in the development of the water sector.
This is in line with President William Ruto's administration to invest in water harvesting and storage for domestic use, livestock and irrigation.
"The objective is to alleviate water challenges caused by climate change through the construction of at least 100 large dams through PPPs, 1000 medium dams, and 3000 small dams," The Cabinet said.
It also established a licensing framework for these agencies to align the Water Act 2016 with the Public Private Partnership Act 2021.
"While the ongoing rains have provided relief to drought-affected areas of Kenya, the Cabinet recognises the need for locally-driven strategies and sustained resource mobilisation to support long-term resilience building."
The meeting also agreed to continue supporting the restocking of livestock to aid recovery among impoverished households in arid regions.
