Kenya’s President Uhuru Kenyatta has issued a statement on the presidential taskforce (the Taskforce) report with recommendations to review power purchase agreements (PPAs). The Taskforce was appointed in March this year to review the terms of PPAs entered into between various independent power producers and the Kenya Power and Lighting Company Limited (KPLC).

 

4 October 21

The President accepted the recommendations of the Taskforce and has directed the Ministry of Energy to implement them by 25 December 2021. The key recommendations of the Taskforce include:

  1. the renegotiation of all existing PPAs with independent power producers to reduce the tariffs payable under such agreements. The renegotiation of the PPAs is required to be done ‘within the existing contractual arrangements’ presumably to mitigate the risk of claims against KPLC and the Government;
  2. the cancellation of ongoing negotiations for PPAs between KPLC and independent power producers. This cancellation is a setback to independent power producers whose projects had already been procured under the Feed-in Tariff Policy given the efforts and resources deployed in developing these projects up to the point of PPA negotiations;
  3. the adoption by KPLC of standard PPAs and a standard Government letter of support; and
  4. the disclosure of the registered owners and beneficial owners of the independent power producers.

In light of these developments, we expect that there will be several changes to the power sector in the coming months especially in areas such as procurement, establishment and negotiation of tariffs and the new forms of PPAs and Government letters of support — all of which will have a significant impact on independent power producers and their financiers. It remains to be seen whether the deadline for the implementation of these recommendations will be achieved.

The President’s full statement on the report by the Taskforce can be read here.


Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Amyn Mussa.

The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.

 

 

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