Ministry of Energy wants MPs to lift ban on new power deals

The Ministry of Energy and Petroleum is lobbying Members of Parliament (MPs) to lift the moratorium on the signing of new Power Purchase Agreements (PPAs).

The moratorium was put in place by the National Assembly in April 2023 and also put a break on the renewal of PPAs that have expired.

Energy Principal Secretary Alex Wachira says the Ministry is seeking the intervention of lawmakers to remove the ban. He said the ban has affected the country’s capacity to contract new power producers, which is threatening energy security.

“As an economy, we cannot grow without power. It is for this reason the Ministry of Energy and Petroleum continues to seek the intervention of Members of Parliament on the lifting of the moratorium on signing new Power Purchasing Agreements (PPAs) and renewal of those that are set to expire,” said Wachira.

The PS was speaking on Tuesday during the release of Kenya Power’s financial results for the financial year 2023/24. He said that the moratorium continues to send a negative signal to investors looking to develop additional generation capacity.

The ban was first put in place by former President Uhuru Kenyatta in 2021 as one of measures aimed at addressing concerns over the high cost of power.

It was one of the recommendations made by the Taskforce on Review of PPAs which he had formed in March of that year. The Cabinet lifted the moratorium early last year but this was short-lived as it was subsequently reinstated by the National Assembly.

This impasse means that over the last three years, Kenya Power has not been able to sign any new deals to buy power from generators. This has affected energy security as demand inches ever closer to outstripping supply especially during peak demand.

“As highlighted by the (Kenya Power) CEO, the greatest threat to the power sector is the shrinking margin between peak demand and available capacity. We need to increase our spinning reserves to match the growing demand for power. This requirement is critical for both domestic and industrial consumers,” said Wachira.

Consumers will however receive a boost from two new geothermal power plants that are currently under construction, both at Menengai in Nakuru County.

The two power plants each have an installed capacity of 35MW and are set for completion in 2025 and 2026 which will inject new supply to the grid. The PPAs for the two plants were signed years before the Uhuru-era ban on new power contracts.

info@theenergyreview.com