Energy and Petroleum Cabinet Secretary Opiyo Wandayi has petitioned the National Assembly to consider lifting the moratorium it imposed on the government about the Power Purchase Agreements (PPA) as a way of restoring investor confidence in the sub sector.

Accompanied by the Principal Secretary for Energy Alex Wachira, Wandayi said the moratorium impossed in 2023 has negativity impacted efforts to negotiate better and affordable Power Purchase Agreements with the Independent Power Producers.

“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,” he said.

Wandayi said the state of energy security and the importance of strategic infrastructure development, especially electricity, which is critical for Kenya’s economic growth and sustainable development, requires a critical re-look at the PPAs.

“Power Purchase Agreements have a critical role to play in the infrastructure expansion, as they are crucial in securing the necessary investment in energy projects with the aim of strengthening the country’s energy infrastructure and security,” he added.

The Cabinet Secretary was speaking in Naivasha during a retreat with members of the National Assembly Departmental Committee on Energy.

Addressing the gathering, the PS said the country has experienced increased demand in the midst of declining contracted capacity due to retired power plants, decline in efficiencies of existing power plants as a result of age and maintenance, and lack of new generation capacity. “The country is already experiencing power supply shortfall and demand management, which will worsen if the moratorium is not lifted,” he said.

The PS said that among the possible outcomes of failure to uplift the moratorium are increased power rationing during peak hours, power outages as a result of suboptimal intermittent generation, increased cost of power due to enhanced dispatch of thermal power plants, and over reliance on imported energy from Ethiopia, Tanzania and Uganda.

The PS said the Ministry’s 2024-43 Least Cost Power Development Plan (LCPDP) envisages that electricity demand will grow at an average of 6% annually over the 20 years horizon. “The demand is expected to reach 2,871MW in 2028 and 8,152 by 2043. To meet this growing demand, various power generation projects that have been earmarked for development in the LCPDP need to be developed, and storage solutions such as pumped hydro storage and Battary Energy Storage System (BESS) to provide ancillary services towards enhancing grid security needs to be considered,” he added.

Moratorium

On September 2021, Presidential Task Force on the Review of Power Purchase Agreements placed a moratorium on the renewal of expiring PPAs and new ones not concluded by then. The moratorium would later be lifted by Cabinet in February 2023 on the basis of addressing the challenges of realizing a sustainable energy mix occasioned by the prolonged drought, thereby enhancing the nation’s energy security.

However, the National Assembly vide a motion on 19th April 2023 made a resolution relating to the reduction of the cost of electricity. It also placed a moratorium in addition to directing the Ministry of Energy and Petroleum and Kenya Power and Lighting Company in particular to develop suitable strategies for engagement with the IPPs in order to provide relief to electricity consumers and ensure the long term viability and sustainability of the energy sector.