President Uhuru Kenyatta on Sunday, December 12 announced the slashing of power prices with changes to reflect on bills from December.
The 30% price cut is to be implemented in two tranches of 15% each. In the first phase before the end of the year, the cut will be realized by reducing commercial and system losses.
The second 15% cut to be implemented in the first quarter of 2022 will be implemented by addressing what has come to be considered the Kenya Power and Lighting Company’s Achilles heel – power purchase agreements. The flawed contracts have been identified as a major bottleneck in KPLC’s operations and one of the main reasons for expensive consumer prices.
The government wants to renegotiate the PPAs in Q1 2022 to enable the price cut.
“The reduction of the cost of electricity will be implemented in two tranches of 15 percent each with the first 15 percent achieved through initial actions focusing on system and commercial losses, to be reflected in the December bills and a further 15 percent reduction in the first quarter of 2022,” Uhuru stated.
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Consumers who have been feeling the pinch of high power prices welcomed the news noting that lower bills would help ease the burden as the economy recovers from the shocks of Covid-19.
How it will be implemented, however, remains to be seen as President Kenyatta had in August also promised the reduction of power prices by 33% by Christmas.
At the time, the state’s plan was to push for a speedy review of the PPAs. It later emerged that the move flopped due to strong opposition from Independent Power Producers (IPP) who signed the multi-year contracts to supply KPLC with power at set prices.
They rejected the push by the government to have them review the price at which they sell power to KPLC. The IPPs argued that their arrangements with shareholders and creditors would be adversely affected if the changes were unilaterally implemented.
Analysts have speculated that more negotiations and, potentially, a legal battle could be in the offing with the Kenyatta administration having committed to reforming Kenya Power with less than a year left on his term.
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