Cost of electricity: MPs question high amounts paid to independent power producers

An audit report by the Kenya Power Limited Company for the Financial Year 2022 has revealed a major disparity between the cost of power procured from the Kenya Electricity Generating Company (KenGen) and the power procured from Independent Power Producers, (IPPs).

The disparity, which translates to billions of shillings reflected on the cost of electricity bills to consumers, was the key subject during the grilling of IPPs by a Parliamentary committee inquiring about the causes of the escalating cost of electricity in the country.

According to the report, KenGen supplied a total of 7,911 Gigawatt-Hours or 63 per cent of total power purchased while the IPPs supplied the remaining 4,742 Gigawatt-Hours representing 37 per cent.

However, the total amount paid out by KPLC to KenGen was Ksh.38.9 billion, which was only 41%, compared to the cost of purchase of power from IPPs who were paid Ksh.56.2 billion or 59%.

This means that up to Ksh.17.3 billion of taxpayers' money could be saved by the KPLC if it utilizes the maximum capacity of electricity produced by KenGen. 

“How is it that KPLC pays double the amount of purchase cost to IPPs which produce half of what KenGen produces?” Embakasi South MP Julius Mawathe posed.

“These inconsistencies are the ones burdening ordinary Kenyans with the high cost of electricity,” Gem MP Elisha Odhiambo said. 

Borabu MP Barongo Bamachoge, on his part, added: “These are technical anomalies that result in a financial burden to consumers.”

The analysis by the Auditor General also revealed that it costs KPLC an average of 3.93 cents per Kilowatt-Hours of power purchased from KenGen while it cost the company an average of 11.87 cents per Kilowatt-Hours of power from IPPs. 

The Auditor General concluded that KPLC entered into expensive contracts with Independent Power Producers, and was in some instances selling power below the cost price. 

 “How do you feel being paid yet you have already made returns for your investments?” National Assembly Energy Committee Chairperson Vincent Kawaya posed.

Mawathe added: “Is it fair fleecing money in billions from taxpayers?”

Of the four IPPs that were grilled by the Parliamentary energy watchdog Committee over the escalating cost of electricity in the country, Iber Africa, Thika Power and Gulf agreed to re-examine their Power Purchase Agreements with KPLC with a view to reviewing the cost of production while Triumph Africa stated it has to first consult with its shareholders and lenders. 

The Parliamentary energy watchdog will grill additional directors of the country's Independent Power Producers, as it intensifies its inquiry into the escalating cost of electricity in the country.