This archive report was first published on 5 July 2021.
Kenya's power sector has undergone significant changes since the early 2000s, with Independent Power Producers (IPPs) playing a crucial role in stabilizing the supply of electricity in the country.
Following a two-year drought in 1999 and 2000 that saw the country's hydropower dams dry up, the government resorted to rationing electricity, leaving 70% of the country's power generation to hydroelectric dams.
Domestic and commercial customers had to do without grid power for about 12 hours a day for six months, devastating livelihoods and businesses.
It was against this backdrop that the country opened up the power sector to IPPs, but in the rush to do so, the details of the contracts that the power firms signed with the government were put on the back burner.
These contracts, which were heavily skewed in favor of the power producers, exposed the country to secretive deals that have left Kenyans questioning the billions paid to the companies.
Thanks to the Energy Act of 1997, it was not difficult to bring on board the IPPs, which would put up thermal power plants. Such plants are fairly easy to install and start operating compared to others such as geothermal.
However, the companies have turned into pariah entities, with everyone blaming them for the high cost of power. Kenyans are increasingly questioning the billions paid to the companies, with the payments at times not being commensurate with the power they supply.
According to the Public Investments Committee (PIC), the thermal power firms sell a unit of power to Kenya Power in the region of Sh30, while others sell at around Sh10 or less.
Efforts are underway to have future contracts okayed by Parliament before they are signed. The National Assembly's Committee on Finance and National Planning has proposed amendments to the Public-Private Partnerships (PPP) Bill 2021, requiring the IPPs to open up for scrutiny by Parliament.
The Bill, which is being debated at the National Assembly, is expected to replace the current PPP framework. Power plants set up by IPPs are built as Public-Private Partnerships (PPPs), with the government putting in some facilitation, including letters of support.
Stakeholders say the criticism against the IPPs is uncalled for, noting that they incur heavy investments in putting up the power plants, and it is only fair that they can recoup their investments as they have no one else to sell their power to.
