Kenya pays Sh1 billion for ‘non-existent’ electricity supply

David Ndii, Chairman, Presidential Economic Advisors

The looting of taxpayers’ money through the Kenya Power and Company Plc (KPLC) continues.

As per KPLC 2021 – 2022 annual report, an Independent Power Producer, Tsavo Power Company Limited received Sh1 billion payment despite not having any contractual Power Purchase Agreement (PPA) with the Kenyan govt.

The PPA for Tsavo Power, which used to operate Kipevu II Thermal power plant, expired in 2020, yet in 2022 it supplied 48 million units of power and was paid Sh1 Billion.

In July 2021, Uhuru Kenyatta’s regime announced that homeowners and businesses producing more than one megawatt (1MW) of electricity from solar will be required to sign Power Purchase Agreements.

Why is Tsavo Power allowed to supply electricity without a PPA? – Chief Editor asks.

Kenyans were tired of unreliable and expensive electricity and were moving to cheaper and greener solar options when the government announced that.

Unrelenting, Kenyan firms that could afford to pay for the PPA and install massive solar on their roofs continued doing so.

In September 2021, President Uhuru Kenyatta ordered the cancellation of all ongoing and incomplete power purchase agreements being negotiated with KPLC.

This did not deter the now powerful cartels from circumventing the law and continue to sell expensive power.

The payments to be made to the licensee in respect of electrical energy sold or ancillary or network services provided by virtue of this licence or permit shall be in accordance with the Power Purchase Agreement or Network Service Contract or tariffs (or any other subsequent PowerPurchase Agreement or Network Service Contract or tariffs) as approved by the Commission – Energy ACT, No. 12 of 2006

During the sunset years of his presidency, Kenyatta was legendary for announcing decisions which were never followed through.

If you want to understand how powerful the cartels in the energy sector are; first, they recently walked out of a meeting with Trade CS Moses Kuria.

Secondly, Moses Kuria and President William Ruto’s chief economic advisor David Ndii started talking from the same elitist page.

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They, at different occasions, told off Kenyans over complaints of high energy costs.

“We need to reduce the amount of emotions around this issue. A Kenyan would rather spend all the money betting or speaking on phone, that is not expensive. But when you tell Kenyans let’s pay 1000 shillings for electricity which is going to power us then that becomes emotional,” Moses Kuria told Kenyans in an interview with Citizen Tv’s Trevor Ombija.

A few days later, David Ndii would add, “On power bills, we have two choices. Costly power available 24/7, or cheap power available a few hours a day, like SA. If you cared to peruse our manifesto, you would have noted that cheap power does not feature in our pledges on electricity.”

Tsavo Power was paid for supplying electricity without any PPA | Source KPLC Annual Report 2021 – 2022

It is clear that the IPPs have won once again, but what is more painful is that this is the regime that came to power on the back of helping the poor of the poor, the so-called hustlers.

Most IPPs, use thermal means, i.e. burn fossil fuels to produce electricity.

This is expensive, what Kenya should do is to stop renewing licenses for IPPs once they expire.

However, for some reason, this seems to be a tall order as you can see Tsavo Power supplied KPLC with electricity long after their license had expired.

An economist’s take

David Ndii’s sentiments attracted bashing from a section of Kenyans who understand the economics of energy production.

In his defence, Ndii made other remarks that revealed the true nature of the govt policy in energy.

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“One more time. Power cost reduction is to protect profitability so as to attract more private investment into the industry. No intention to pass cost benefits to consumers. At best, tariffs will not go up as fast as they otherwise would. The future is more IPPs, not less,” he said.

Former Saudi Central Bank economist Mohamed Wehliye responded to the above by stating these:

“More IPPs? How can that be David when Kengen supplies 72% of power but IPP boys eat 52% of money paid to power producers? When Kenya Power is paying Kengen Ksh 16 for unit of power and as high as Ksh 170 for IPPs? How can more of this rip off be good?. And there is no sight of relief. These guys will be eating until we all fall dead. Now you want to add more of these blood suckers? Hell NO!,” he wrote sharing the below photo.

It now seems that Kenyans must brace for expensive energy even as it produces what can comfortably supply electricity to the whole country for cheap.

Some reports have indicated that Kenya energy producers sometimes switch off power plants to keep up high costs of electricity.

About the author

Karecha Kamaris

Karecha Kamaris is the space between earth and heaven, the gap between ice and fire, the elementary molecule that justifies unending peace in the sea of turmoil. An 'appetite for adventure over the love of ease'.

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