- Kenya allows only Kenya Power to sign import agreements with foreign electricity producers.
- Kenya Power has deals with Ethiopia Electric Power and the Uganda Electricity Transmission Company Limited.
Kenya has disclosed plans to allow private firms in the electricity distribution market to import power from neighbouring countries, forcing power producers to cut wholesale tariffs. This is among the Energy and Petroleum Regulatory Authority (EPRA) proposals to open the electricity distribution sector, spark competition with Kenya Power and boost service delivery to consumers.
This new plan for private power distributors will likely trigger increased competition on the wholesale tariffs, ultimately leading to cuts in the cost of power to consumers. High wholesale tariffs from producers have made it difficult for Kenya Power to reduce power bills for consumers because it cannot sell electricity at a loss.
The government allows only Kenya Power to sign electricity import agreements with foreign electricity producers. It has deals with Ethiopia Electric Power and the Uganda Electricity Transmission Company Limited.
EPRA has, in the draft Energy Electric Power Undertaking Licensing Regulations, 2024, proposed a licence that will allow firms to import electricity for sale to consumers or those generating power locally to export to other countries.
According to the regulations, “The Authority may, on receipt of an application, grant the applicant any of the following categories of licence: Electricity export/import licence, which shall entitle the holder to export or import electrical energy to or from another country.”
The licence will also allow the firms to export power to neighbouring countries, offering them a broader basket of buyers. This is a move that sets up Kenya Power for having to offer more competitive rates to power producers.
The licence to import and export electricity is one of the five that the government offers new entrants into the electricity generation and distribution space. They include licences to build, operate and maintain systems meant to generate electricity, approval to build, operate and maintain infrastructure meant for power transmission and a retail supply to sell, bill and collect revenue.
The other licences will allow firms to build infrastructure to carry electricity generation stations at high voltage to load centres or connect with another transmission system, including Kenya Power. The draft regulations follow the publishing of the Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024, which seeks to end Kenya Power’s monopoly for decades.
Firms ready to enter the electricity distribution space have received approval to use the distribution and transmission network of Ketraco and Kenya Power, estimated at 4,660 kilometres and 310,618 kilometres, respectively.
In addition, the new entrants will have to pay wheeling charges (the money paid to a system owner, in this case, Kenya Power and Ketraco) by other firms who wish to use the system to transmit electricity. The Kenyan government require firms to apply to EPRA for licence renewals three years before the expiry of the current ones if the Parliament in the current state adopts the draft regulations.
“If the licensee wishes to renew this licence after its expiration date, the licensee shall submit to the Authority an application for renewal not later than thirty-six (36) months prior to the expiration of this Licence,” the draft regulations added.