By Kepha Muiruri For Citizen Digital
The company has subsequently issued an international tender intended to source a consultant firm to review its cost of generation, competitiveness and determine any other areas of improvement.
Notes by the company in the tender offer implies KenGen could be roped in discussions that are aimed at cutting the cost of electricity purchases by Kenya Power with the aim of bringing a second-round trim to electricity costs in the country.
“The company operates in a dynamic regulated environment which is governed by various laws, policies, and institutional frameworks. The primary objective of the sector is to deliver power to customers reliably and at an affordable cost. Currently, there are ongoing sector reforms geared towards making the cost of power more affordable to customers,” KenGen said in a notice on Tuesday.
The sought after consultant will have six months to review KenGen’s cost of service including capital costs, operation and maintenance costs, administration costs and financing costs.
Further, the consultant is expected to determine and quantify the adequacy of KenGen’s compensation, study and quantify the impact of power evacuation and review the company’s project pipeline in light of the Least Cost Development Power Pan (LCPDP).
KenGen’s principal activity is to generate and sell electricity to the authorized distributor-Kenya Power.
The company has an installed capacity of 1,817.82 megawatts (MW), 85 per cent of which is renewable.
The firm operates 13 hydro-electric power plants, three thermal power plants, seven geothermal power plants and one wind farm.
In the year to June 2021, KenGen billed Ksh.46.4 billion to Kenya Power representing the gross cost of electricity sales including fuel and water charges.
On its part, Kenya Power recorded Ksh.45.1 billion as the gross cost of sales from KenGen in the same period after purchasing 8.443 gigawatt hours (GWh) of power in the year.
Purchase costs from KenGen represent 46.5 per cent of Kenya Power's non-fuel cost of sales and 30.8 per cent of fuel related sales.
The utility company nevertheless owes KenGen Ksh.25.1 billion as of June 2021.
KenGen’s operating expenses stood at Ksh.12.9 billion in the year to June 2021 from Ksh.10.9 billion while its operating income rounded off to Ksh.43.3 billion from Ksh.46.7 billion in June 2020.
The electricity generator’s revenues after the reimbursement of fuel and water costs meanwhile stood at Ksh.41.7 billion from Ksh.39.8 billion.
KenGen’s move to review its cost of electricity generation comes as the Ministry of Energy stages discussions with independent power producers (IPPs) with the view of bringing down the cost of electricity to Kenyans.
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