KenGen, KPLC in deal over tariff row

By John Njiraini

A protracted standoff between KenGen and the Kenya Power and Lighting Company (KPLC) over power tariff charges has ended.

KenGen Managing Director Eddy Njoroge said the two companies have reached a consensus on a new power purchase agreement that will be unveiled tomorrow, ultimately bringing a conflict that has spanned seven years to a close.

"We have reached a deal with KPLC that reflect a win-win situation for all parties," he said.

Though he could not reveal details of the new structure under which KPLC will purchase bulk power from KenGen until tomorrow, Njoroge said the new tariffs would not affect retail prices.

The tussle between the two companies has been running since September 2003, when the Cabinet directed KenGen to charge KPLC a bulk tariff of Sh1.76 per unit down from Sh2.36 per unit to enable the latter restructure and return to profitability.

KenGen consented on the understanding that the reduced tariff would apply until June 30, 2006, after which it would revert to the old level of Sh2.36 per unit as signed in an interim power purchase agreement in July 1999.

The deal was not honoured and instead the Energy Regulatory Commission wanted KenGen to sign a long-term power purchase agreement at a cost of Sh2.19 per unit.

KenGen refused and launched a complaint with the Energy Tribunal, which last year ordered KLPC to pay KenGen 95 per cent of the tariff and deposit the rest in a joint account.

The failure by the Tribunal to fully resolve the standoff forced KenGen to go to court and the matter has been pending.

Speaking yesterday while touring the Tana Power Station that is being redeveloped, Njoroge said the new structure caters for the interests of both companies.

The Tana plant, which is among the oldest within the Tana cascade, is being upgraded at a cost of Sh3 billion to increase it generation capacity from the current 10 MW to 20 MW.

"This plant has been running on old technology and we are redeveloping it to make it more efficient," said Njoroge.

Already 70 per cent of the work has been completed and the new plant is supposed to be up and running in December.