Shock of Sh7bn annual pay for 90MW
A Senate committee investigating the high cost of electricity was yesterday stunned by revelations that an independent power producer (IPP) is paid Sh7.36 billion annually for producing only 90 megawatts of power.
The Energy committee was told Rabai Power Plant signed a 20-year deal with Kenya Power, with the contracts set to end in 2030.
The firm is part of 11 IPPs summoned by the committee over investigations into contracts signed by the firms to supply power to Kenya Power, amid high electricity costs in the country.
The lawmakers want the firms to explain how much they are selling electricity to Kenya Power and why they are being paid in foreign currencies, mainly in US dollars and Euros.
According to the audited accounts for the financial year ended June 2021, KenGen supplied a total of 8,443-gigawatt hours of electricity and was paid Sh44.8 billion.
On the other hand, the IPPs only supplied 3,000-gigawatt hours, which translates to about 30 per cent of the total power, but were paid more than Sh56 billion.
Appearing before the Nyeri Senator Wahome Wamatinga-led committee, the power plant’s general manager Zablon Okwoku was hard-pressed to explain why they are producing little power but reaping billions.
Fuel component
However, Mr Okwoku defended the huge sums, saying what is significantly increasing the cost of electricity, which is then passed over to the consumer, is the fuel component used in power generation.
He explained that they, for instance, use heavy fuel oils (HFOs) to generate power, with their landing costs and other taxes taking almost 45 per cent of operations costs. “The component taking the bulk of the unit cost of kilowatt power is the fuel component. It is beyond the control of the generator,” said Mr Okwoku.
Tana River Senator Danson Mungatana and Kakamega Senator Boni Khalwale asked Mr Okwoku whether there is anything they can do to reduce the cost of power generated for the sake of suffering Kenyans.
The current average cost of electricity per unit is Sh25, an amount they said can only allow a consumer to get 40 units for Sh1,000 or four units for Sh100 spent.
Mr Okwoku maintained that lowering the cost of production of power is dependent on the lowering of fuel charges and other taxes by the government.
He said the power plant runs on five engines on HFO but has started generating some steam from five boilers, producing about 6.5MW which, he said, has seen them use less fuel and produce more power.
“Among the thermal power plants, Rabai is the most efficient, reliable in the country and is cheaper than most KenGen thermal power plants,” he said.
The Electricity Consumers Society of Kenya (ECSK) had last month decried the skewed contracts signed between Kenya Power and the IPPs.
ECSK Executive Director Isaac Ndereba questioned why IPPs are selling their power with varied costs, with some supplying at a cost of Sh26 per kilowatt yet KenGen, the largest power producer, is selling at Sh5 per kilowatt.
While only filling the deficit of national consumption of about 30 per cent, he asked why the IPPs must be paid in foreign currencies yet KenGen is paid in local currency.
However, Mr Okwoku said Kenya Power procured loans from four investors and the funds were paid in dollars.
He revealed that the firm has no local investors, with its shareholding from Denmark, Japan, France and Germany. BY DAILY NATION
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