Opiyo Wandayi faces energy sector cartels he blamed for high cost of power

James Opiyo Wandayi, who has been nominated for the post of Cabinet Secretary Energy and Petroleum, in March last year said in Parliament that the problem with Kenya’s energy sector is that it is infested by cartels. 

The Ugunja MP and National Assembly Minority leader went ahead to state that he had a dossier detailing how deeply entrenched the cartels are and that they have captured the electricity sector, making it difficult to bring down the cost of power.

At the time he noted that the cartlets, which he termed as lethal and dangerous, have been able to embed themselves in different regimes, successfully being able to fit into President William Ruto’s Kenya Kwanza administration after Jubilee left power.

He noted that there must be courage in handling them, something necessary to deal with the high cost of energy. Wandayi has been a harsh critic of the government and has noted dalliance by government entities with questionable private sector players has always had the impact of pushing up the cost of living for Kenyans.

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Wandayi accused them of economic sabotage and noted that “if it were in some jurisdictions such as in the communist world, such fellas would be rounded up, taken to Uhuru Park and executed.” He further urged the committee chairman to "tell them to go back, and give them a specific date to come back with specific answers.”

In this instance, his anger was directed at Kenya Power and independent producers, whose contracts with the power distributor have been blamed for high cost of power.

He may have been pushing from the opposition but in his nomination to be the next CS for the two critical dockets of energy and petroleum, it may be argued that he has gotten the wish of having the powers to deal with the cartels.

Should he sail through the vetting process and become the next CS, his immediate challenges will be the high cost of fuel and power. 

High energy costs are not just a headache for the common Kenyan but have been cited as among the challenges that have caused closure of factories and also deterred others from setting up in Kenya as companies look for jurisdictions with cheaper power prices. This has meant loss of jobs for ordinary Kenyans and tax revenue. 

Wandayi will come face to face with the cartels that he has blamed for the high cost of power, which peaked at Sh36.81 per kilowatt hour in January this year. While power prices have eased in recent months following the heavy rains and an adjustment to the power tariff to Sh31.25 currently, observers note that the drop should have been bigger considering reliance of thermal power producers should be minimal considering the increased generation from cheap hydro sources.

It is the case for fuel prices, which though have reduced to Sh188.84 per litre of super petrol and Sh171.60 per litre of diesel in Nairobi from a high of Sh217.36 (Petrol) and Sh205.47 (diesel) in November last year, a higher road maintenance levy prevented Kenyans from enjoying much lower fuel cost. The levy was hiked to Sh24 per litre of super petrol and diesel in the July-August pricing cycle despite an earlier assurance by the government that it would not go up as it sought to cushion motorists from high cost of living. 

Wandayi will also have to deal with the controversial system used to import petroleum products to Kenya. The Government-to-Government system that the Ministry put in place in March last year to tame the slide of the shilling has been criticised as having been vague by different stakeholders including Wandayi’s ODM party.

Wandayi holds a Bachelor of Science in agriculture degree from the University of Nairobi. He has a diploma in business management from the Kenya Institute of Management and an Executive MBA from the Jomo Kenyatta University of Agriculture and Technology (JKUAT). He is also pursuing a Bachelor of Law at Daystar University. 

Perhaps his background puts him at a disadvantage when handling the issues at the Energy and Petroleum Ministry as has been the case with his predecessors. 

Sector analysts note that having non-engineers at the helm of the industry, not just at the CS level but also those reporting to him including the PS and heads of parastatals, over the last five years has resulted in a number of regulations being ignored due to their technical nature. This is despite the role they would play if in place in advancing the local energy sector. 

Eng Isaac Ndereva executive director Electricity Consumers Society (Elcos) noted that since the Energy Act 2019 was enacted, there are many regulations that were developed in line with the act.

This mandate fell on Epra, which developed some 19 regulations, some having been completed as early as 2020 but are yet to be enacted, which Ndereva said is due to inadequate capacity among the CSs as well as the people around them. 

“During this time, the ministry has been led by Charles Keter (Lawyer), Monica Juma (Administrator), Davis Chirchir (IT). All these CSs would not make head or tail of the regulations on their desk and could not append their signature without understanding,” said Ndereva. 

“The person to make them understand is the PS or the EPRA DG. The regulations were developed by the engineers as consultants and proofread and passed by the stakeholders who were also largely engineers because of the nature and contents of the regulations.” 

“The CS would then require an engineer to explain. To be specific this would be the director of Electricity and renewable energy in EPRA or the Deputy Director of energy Efficiency. Both of those positions are held by Registered Professional Engineers and PhD holders. But their positions may not have direct access to the CS.”

“The regulations on the CS desk are supposed to assist the ordinary Kenyans but if nobody at the senior position at the ministry has interest, or will explain to the CS how he can benefit, then they will continue collecting dust.”

He observed that despite the numerous regulations that have been shelved, some regulations about the energy market were approved and gazetted even before the conclusion of public participation and was amidst a lot of opposition by the stakeholders. 

One such instance was the gazetting of the Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 that are aimed at opening up the retail and distribution of electricity. The Ministry gazetted in March despite plans by Epra to hold public participation the same week. 

“The biggest problem will start when the president announces a non-engineer to the position. It will mean that nothing will be approved,” said Ndereva. 

At the end of this year, Wandayi will have to decide on whether to continue with the government-to-government oil import deal or revert the private sector-led Open Tender System (OTS). 

The government-to-government deal system of importing petroleum products kicked in March last year, at the time to tame demand for the US dollar among oil importers and in turn slow down the weakening of the shilling. In the deal, the government contracted three state-owned gulf oil companies to supply fuel to Kenya on a six-month credit. Over the six-month window, local oil firms appointed by the gulf companies to collect payments on their behalf in Kenya would buy dollars, as opposed to the monthly rush that had been previously experienced whenever oil marketing companies had to pay for their cargoes.

The government-to-government import system that kicked in March 2023 was initially for a nine-month period to December 2023 but this was extended by a year to December 2024.

Wandayi’s party leader Raila Odinga at one point referred to the oil import system as a “grand scam”.

He will also be taking over an upstream sector that has failed to live up to the hype. The project that has been trying to exploit the oil discovered in Lokichar, Turkana County, in 2012 has been jogging on the spot for years and just suffered a major setback after Epra declined to approve Tullow Oil’s Field Development Plan (FDP). Epra cited gaps in the plan that has been under consideration since 2021. Tullow expects that an approved FDP will enable it to get a strategic investor to move the project forward. 

The promised billions that would have come with Kenya being an oil exporter are slipping by the day as the world shifts from fossil fuels, which is seen in major financiers refusing to fund new oil projects, especially for new oil producers such as Kenya.