Kenya Power has been offered a KSh 7.05 billion subsidy to allow the company to lower consumer electricity bills.
Following the move, the utility company will reduce the cost of electricity by 15 percent without hurting its cash flows.
The Budget Committee of the National Assembly revealed the subsidy after independent power producers (IPPs) declined a proposal to cut their tariffs and allow Kenya Power to lower electricity rates.
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“To shield KPLC from the effects of the electricity price reduction prior to the implementation of this second phase, the company has been allocated Sh7.05 billion in the proposed budget for 2022/23,” the Budget and Appropriations committee said.
“There is slow progress in implementing the recommendations of the Presidential Taskforce Report on the review of the power purchasing agreements (PPAs) to reduce electricity prices by 33 percent.”
The State promised a similar cut in a plan based on the review of power purchase agreements (PPAs).
President Uhuru Kenyatta ordered a review on all power purchase deals with independent producers, paving the way for a reduction in the cost of electricity by a third.
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He appointed a taskforce after it emerged that Kenya Power had signed contracts committing it to take more electricity than it can sell.
This means Kenya Power would pay onerous capacity charges to energy producers even when their plants are idle.
“The President has also examined and welcomed the recommendations of the Taskforce that establish a path towards the reduction of the cost of electricity by over 33 percent within four months,” reads a statement from State House.
The company was also barred from finalising any un-concluded power purchase deal or renewing expiring contracts with the producers.