Kenya: President Uhuru Kenyatta orders Kenyan electricity contracts to be reviewed to cut electricity bills

Kenya Power has four months to review all power purchase agreements with independent producers, paving the way for a one-third reduction in electricity costs.

Negotiating energy prices and other conditions down by the end of December is one of the recommendations in a report presented to President Uhuru Kenyatta on Wednesday.

The power distributor was also prevented from entering into an unfinished electricity purchase agreement or renewing expiring contracts with producers after electricity bills hit a 38-month high in August.

President Kenyatta appointed the task force in March after it was revealed that Kenya Power had signed contracts pledging to purchase more electricity than it can sell.

The flawed contracts have led Kenya Power to pay onerous capacity fees to energy producers even when their power plants are shut down.

“The President has instructed the Cabinet Secretary of the Department of Energy to ensure the immediate implementation of all recommendations of the Task Force by Christmas Day 2021,” said a statement from the State House.

“The President has also reviewed and welcomed the Task Force’s recommendations that show a way to cut electricity costs by over 33 percent within four months.”

A review of the deals will see consumers who paid an average of Sh500 per month pay Sh330, a relief for millions of households still struggling with reduced purchasing power and high costs for kerosene, diesel and gasoline.

Lowering the fixed costs in energy contracts will give Kenya Power financial relief and lower electricity bills for consumers.

Electricity bills hit a 38-month high this month due to the increase in the fuel surcharge on electricity tariffs.

The fuel cost charge (FCC) for September rose from Sh3.77 last month to Sh3.88 – the highest since July 2018.

Other recommendations include a forensic review of procurement and system losses from the use of heavy fuel oil and the disclosure of the owners and beneficiaries of all independent power producers that the utility has contracts with in its annual business reports.

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