Opiyo Wandayi Unveils Bold Energy Reforms to Cut Costs and Expand Access for Kenyans

Energy Cabinet Secretary Opiyo Wandayi has introduced key proposals to lower electricity costs and extend access to millions of households nationwide.

In the newly released Draft National Energy Policy, Opiyo Wandayi outlined plans for a three-year cycle review of electricity tariffs. This measure aims to enhance predictability, ensure timely cost recovery, and maintain fair, cost-reflective pricing for consumers.

The policy also advocates for a Competitive Electricity Retail Market, encouraging private sector involvement. This initiative will pave the way for the establishment of Electricity Supply Companies (ESCOs), enabling private players to participate in electricity distribution and retail services.

To further enhance competition and affordability, the policy encourages structuring Power Purchase Agreements (PPAs) that enable generators to sell electricity directly to consumers, therefore ending the monopoly enjoyed by the government in the supply of electricity, which Kenyans have in the past attributed to the high cost of power products.

The proposed flexible power purchase contracts will facilitate direct retail and power wheeling, promoting competitive pricing and greater efficiency in the electricity sector.
To enhance access to electricity for low-income households, CS Wandayi announced that the government will introduce targeted fiscal incentives, including tax exemptions, subsidies, and grants. These measures aim to make energy more affordable and accessible to disadvantaged communities.

Additionally, the government plans to streamline and harmonize various charges on energy operations while offering adequate fiscal incentives. This approach is designed to create a more predictable and appealing investment climate within the energy sector.

These measures are expected to lower the cost of electricity and energy-related products, with the government aiming for the benefits to reach consumers directly.

To support these initiatives, CS Wandayi stated that the government will seek financing from both local and international sources to fund the proposed plans.

Additionally, efforts will continue to attract public-private partnership (PPP) investors in the energy sector. This will help mobilize resources for infrastructure development through asset monetization, climate financing, and local equity funds.

The search for investors in the PPPs financing model comes at a time when the government recently suffered a setback in the last quarter of 2024 when President William Ruto was forced to cancel all the contractual arrangements that Kenya had with the Indian conglomerate of companies, Adani Group.

This was after the decision sparked a wave of condemnation from the public over the circumstances surrounding the investments.