Kenya’s Parliament Rejects Ministry’s Bid to Lift Moratorium on Power Purchase Agreements Over Transparency Concerns

NAIROBI, Kenya – Kenyan Members of Parliament (MPs) have rejected the Ministry of Energy and Petroleum’s proposal to lift a moratorium on Power Purchase Agreements (PPAs), emphasizing the need for increased protections to shield taxpayers from potential exploitation by private power producers.

The Ministry, under Cabinet Secretary Opiyo Wandayi, argued that lifting the moratorium, particularly for coal-fired plants, would allow Kenya to meet its growing energy demand through a more diversified power generation mix.

However, legislators at a National Assembly leadership retreat at Naivasha’s Enashipai Resort insisted that the ministry must establish robust safeguards before approving any new PPAs.

Chaired by Mwala MP Eng. Vincent Musyoka, the Departmental Committee on Energy voiced reservations about the Ministry’s proposal, citing previous PPA issues that have led to long-term financial burdens on consumers.

Musyoka pointed out that past PPAs, such as the Lake Turkana Wind Project, have locked Kenya into higher-than-anticipated tariffs, highlighting a contract signed at 16 Ksh/kWh, which exceeded the 12 Ksh/kWh 2012 indicative tariff.

Recent tariffs for wind energy now stand at 5.8 Ksh/kWh, illustrating potential savings that could have been achieved with more competitive agreements.

Parliamentary oversight was a central theme of the debate. Musyoka emphasized that MPs, as representatives of the public, must have a significant role in approving any future PPAs to ensure transparency.

He added that existing agreements require stringent reviews, particularly for contracts with Independent Power Producers (IPPs) involved in wind and solar projects.

“Without addressing the original concerns that led to the moratorium, the ministry cannot expect Parliament to support its removal,” Musyoka stated. “The interests of taxpayers must come first, and Parliament needs a comprehensive picture of energy purchasing agreements to make an informed decision.”

Concerns over costly and opaque power deals were echoed by other MPs, including Endebess MP Robert Pukose and Emuhaya MP Omboko Milemba.

Pukose demanded that the ministry disclose the costs associated with current PPAs, specifically payments to power producers such as Kenya Electricity Generating Company (KenGen).

Meanwhile, Milemba criticized the lack of clarity and called on the Ministry to “demystify” PPA agreements, adding that taxpayers were paying the price for unexamined, high-cost contracts.

In defense of the Ministry’s position, Kenya Power’s Managing Director, Dr. (Eng.) Joseph Siror, acknowledged the high cost of thermal power, such as that produced at the Muhoroni plant.

Siror highlighted ongoing efforts to lower costs by implementing updated technology-based pricing guidelines.

“Once the moratorium is lifted, any new agreements will adhere to standardized cost guidelines, ensuring alignment with current technological advancements,” he noted.

Energy and Petroleum Regulatory Authority (EPRA) CEO Daniel Kiptoo Bargoria also pointed out that the agency has set indicative tariffs to prevent costly overestimations, with updated tariffs covering a range of sources, including small hydro, wind, and biomass.

“We ensure full regulatory compliance, safeguarding that tariffs remain fair and reasonable for all stakeholders,” Bargoria explained.

Despite these assurances, MPs remain cautious. Ruaraka MP Tom Kajwang’ argued that cases like recent negotiations with the Adani Group highlight the need for careful oversight of all agreements.

“We are committed to averting deals that don’t serve the public interest,” Kajwang’ stated, emphasizing the importance of fairness and transparency in negotiations with IPPs.