Workers oppose private sector players in power transmission

Workers in the energy sector have opposed the handing over of some electricity transmission lines to private sector players under the public-private partnerships (PPP). 

Through their giant Kenya Electrical Trades and Workers Union (Ketawu), the employees of various energy sector agencies warned that this could have a major impact on power costs but also expressed fears their welfare would be compromised once private firms came in control of electricity transmission.

The National Treasury has recently said negotiations are underway with two private firms to construct power transmission lines under the PPP model. Adani Energy Solutions of India and Africa50, owned by AfDB, are set to separately undertake the construction and operations of power lines at a combined cost of Sh158 billion ($1.22 billion).

The government has been looking to hand over the construction and operation of several transmission lines arguing that it does not have adequate funds to construct new power infrastructure required to keep up with growth in power consumption.

National interest

The firms will be paid what is termed as wheeling charges for Kenya Power to use their lines in transporting electricity to consumers, a fee that will be passed on to power users.

Ketawu General Secretary Ernest Nadome said the government should safeguard national interests and ensure that essential public services remain under the public domain. 

He said Ketawu would defend the interests and welfare of electricity sector workers and threatened a “monumental strike as a decisive measure to safeguard national interests”.

“We are aware that the government is in the process of privatising all its transmission assets,” he said on Saturday.

“The Ministry of Energy should stop forthwith those attempts… it should forget about that completely. Electrical workers will not accept even an inch of (these transmission assets) being ceded to a private firm.”

The Energy Ministry has been looking at engaging the private sector through PPPs in the construction and maintenance of power transmission lines. It had argued that a major challenge that the country has been experiencing in expanding electricity transmission infrastructure is the under-investment in the maintenance of power transmission infrastructure.

This has been among those that have in the past attributed to the collapse of major transmission lines that have plunged the country into nationwide power outages.

Giving some of the networks to be built by private capital, the Ministry said, would ease pressure on Kenya Power and Ketraco.

Kenya Power pays a wheeling charge to Ketraco — a fee for the use of its transmission lines to transport electricity from power producers to consumers.

In the year to June 2023, Kenya Power paid Sh2.72 billion to Ketraco as wheeling charges. In its disclosures, Kenya Power said it still owes Sh2.59 billion.

It is not clear how the private players in the transmission sector will be paid but could be higher. Unlike Ketraco which is State-funded, the firms will be employing their own funds.

The plan to hand over construction of some of the transmission lines to the private sector could be akin to what the government did with electricity generation in the 1990s and early 2000s when the government was trying to fill the power generation gap.

This saw Kenya Power sign power purchase agreements (PPAs) with Independent Power Producers that have been a subject of controversy and blamed for the high cost of electricity.

Other than the requirement to pay the producers even in instances where they do not supply electricity to Kenya Power - costs that are passed to consumers - the contracts have been criticised as being unnecessarily long, lasting on average 20 years, appear to have left power consumers with the short end of the stick while Kenya Power appears to have little room to renegotiate the contracts.

The PPAs have been so problematic that the Jubilee administration severally tried to look for a way out of the contracts but every time failed to find a way out. Kenya Power has recently said it is still looking to renegotiate the PPAs.

In its annual report for the year to June 2023, the firm said one of its pillars for business transformation was “reduction of power purchase costs” adding that “this entails the renegotiation of power purchase agreements geared toward the reduction in the end user cost of electricity”.

Nadome, who doubles up as the first Assistant Secretary General of Central Organisation of Trade Unions (COTU), also expressed apprehension over the plans by the Kenya Airports Authority (KAA) to engage Adani Airports Holdings in the management of the Jomo Kenyatta International Airport.

The Indian firm has recently submitted a privately initiated proposal to take over the operations of the key hub for 30 years.

Over the period, the firm has said it would invest in upgrading the facilities at the airport as well as building new ones. It will recoup investments through fees that passengers and airlines pay while paying KAA an annual concession fee.