- Kenya’s interconnection with Ethiopia aims to ensure access to reliable and affordable energy for around 870,000 to 1.4 million Kenyan households.
- The deal aimed to help Kenya edge out the expensive power from the national grid and ensure buffers to meet peak demand.
Kenya may renegotiate its 25-year power purchase agreement (PPA) with Ethiopia if the deepening electricity crisis in the Horn of Africa nation gets out of control.
The Energy and Petroleum Regulatory Authority (EPRA) has expressed concern over the escalating energy crisis in Addis Ababa, saying it poses a power supply ‘risk’ to Nairobi and could call for renegotiation of the agreement signed in July 2022.
The chief executive of EPRA, Daniel Kiptoo, told The East African in a telephone interview on April 9, “As of now, they (Ethiopia) have not given any notification to Kenya or to us, the regulator, that they are not able to meet the demand because these are contractual obligations. However, regarding the security of the power supply, yes, it is a risk.
“From the security of power supply standpoint, it could be a risk because even if they (Ethiopia) pay you damages (for breach of contract), the reality is that there is a shortfall of power, and then we have to renegotiate. They have not defaulted on any power delivery as of now, but there is a risk.”
Ethiopia is one of only two countries from which Kenya imports electricity, with the other being Uganda. Kenya signed up to buy power at 6.5 US cents per kilowatt for the first five years before it can renegotiate, meaning the earliest the review talks can happen is 2027.
Furthermore, the deal aimed to help Kenya edge out the expensive power from the national grid and ensure buffers to meet peak demand.
Kenya’s interconnection with Ethiopia aims to ensure access to reliable and affordable energy for around 870,000 to 1.4 million Kenyan households, of which 18 per cent are located in rural areas.
However, Ethiopia is grappling with a sizeable electrification deficit, resulting in widespread power outages and weak access to electricity in rural areas.
The World Bank, in a press statement dated April 3, says Ethiopia has the third largest energy access deficit in Sub-Saharan Africa, considering that about half of its population is still without access to reliable electricity.
The World Bank says, “The electricity deficit in Ethiopia continues to exacerbate the poverty situation, preventing far too many people from fulfilling their basic socio-economic needs and limiting access to opportunity.”
“For Ethiopia to continue to ramp up electricity access through grid connections, it is essential that the electric utilities and backbone infrastructure are fit-for-purpose.”
The World Bank has launched a new programme to strengthen and expand the electricity network in Ethiopia, improve sector financial viability and enable renewable energy generation.
Under the Power Sector Reform, Investment and Modernisation in Ethiopia Programme, the Bank will partner with the government over the next ten years with a financing envelope of up to $1.4 billion to help crowd in other development partners and the private sector in transforming the electricity sector.