NAIROBI, Kenya – The Ministry of Energy has called on legislators to lift the moratorium on signing power purchase agreements (PPAs), warning that the restriction is hindering electricity generation at a time of growing demand.
The Energy and Petroleum Regulatory Authority (EPRA) has raised concerns that the continued ban is causing Kenya’s electricity demand to outpace its generation capacity, increasing pressure on existing power sources.
In September 2021, the Presidential Task Force on the Review of Power Purchase Agreements imposed a freeze on the renewal of expiring PPAs and new agreements that had not been finalized.
The moratorium was later lifted by the Cabinet in February 2023, citing the need for a sustainable energy mix and enhanced energy security amid prolonged drought.
However, in April 2023, the National Assembly passed a motion aimed at reducing electricity costs, effectively reinstating a ban on new PPAs.
Lawmakers directed the Ministry of Energy and Kenya Power to develop strategies for working with independent power producers (IPPs) to provide consumer relief while ensuring the sector’s long-term viability.
EPRA now warns that the lack of new PPAs has stalled the development of power plants that should have been built over the past seven years, heightening the risk of supply shortages.
“From 2018, there haven’t been generation projects (PPAs) that have been signed, and none have gone into the execution phase,” EPRA Director-General Daniel Kiptoo said.
Kenya Power has not signed new PPAs since 2018, following an investigation into how it negotiated deals with IPPs, which contributed to high electricity costs for consumers.
Despite the Cabinet’s decision to lift the moratorium, the National Assembly’s restrictions remain in place, preventing Kenya Power from signing new agreements.
Energy Cabinet Secretary Opiyo Wandayi, speaking at a retreat with the National Assembly’s Energy Committee in Naivasha, warned that maintaining the ban could lead to increased power rationing during peak hours, frequent outages due to inadequate generation, rising electricity costs from greater reliance on thermal power plants, and an overdependence on imported energy from Ethiopia, Tanzania, and Uganda.
“Even in cases where we have received better revised proposals, the moratorium has impeded every effort for negotiations. The net result has been that we get stuck with the current rates,” Wandayi said.
He emphasized that PPAs are crucial for expanding Kenya’s energy infrastructure by attracting investment to bolster energy security and long-term development.
The Energy Ministry and EPRA continue to engage MPs in efforts to lift the restriction, arguing that allowing new PPAs would help stabilize the country’s electricity supply and curb rising costs.
