Electricity in Kenya might get cheaper in the coming months as Kenya signs a 25 year power purchase deal with Ethiopia. This power purchase deal comes at a time when Kenyans are experiencing unprecedented high cost of electricity. The deal signed between the two countries indicate that Kenya will be purchasing power at 6.5 US cents per Kilowatt.
This agreement will help bring the cost of electricity in Kenya down. Currently Kenya Power is facing public rebellion against its high costs. However these costs are generally incurred by the power company as it purchases power from Independent Producers. According to Kenya Power, Kengen accounts for more than 70% of its power supply. Independent Power Producers supply the rest.
Kengen sells their power to KPLC at 5.3 shillings per kilo watt. However, independent producers sell their power to KPLC for over 150 shillings per kilo watt. This extra charge is then transferred to the consumer. The Power from Ethiopia will help solve this constrain as the KPLC will stop or reduce its purchase from IPPs. According to the deal signed between Kenya and Ethiopia, Kenya can only negotiate the terms of the agreement after a 5 year period.
The utility company will start receiving the cheap electricity from next month. Once the power starts coming in, will mark the second cheapest electricity in the country. The 6.5 cents per kilowatt will translate to around 7.8 to 8 shillings per kilowatt according to the current rates.
Recently, Kenyans have experienced a very high surge of cost of power after a reduction of 15% of the cost power was reversed. The cost reduction had been initiated by former President Uhuru Kenyatta in January this year. The reversal saw a kilowatt hour jump to Sh25.3 for domestic consumers who use more than 100 units a month.