Kenya parliament ends PPA freeze, orders full disclosure of IPP ownership in major energy-sector overhaul

• Kenya’s National Assembly has lifted a nearly three-year freeze on new Power Purchase Agreements (PPAs) and ordered sweeping transparency measures for Independent Power Producers (IPPs), marking the most consequential reforms in the sector in years.

In a directive aimed at restoring public confidence, lawmakers ordered the Business Registration Service (BRS) to publish a full list of shareholders and beneficial owners of all IPPs within six months. The sector has long faced suspicion over opaque offshore structures, politically connected partners, and allegations that hidden beneficiaries have pushed electricity tariffs higher.

The decision forms part of a broader overhaul accompanying the end of the moratorium, which had been in place for 2 years and 8 months and had stalled private investment while complicating Kenya Power’s procurement plans. MPs voted by acclamation on Wednesday, November 12, to end the freeze, enabling new private generation projects to proceed.

Speaking on Thursday, Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui welcomed the change, calling it “a significant shift in Kenya’s energy landscape.” He said wholesale prices are now at Sh9.04 ($0.07) per kWh and predicted that new investments would boost capacity, cut outages, and help stabilise tariffs.

New currency rules and pricing controls

Parliament also approved a new currency framework that will allow future PPAs to be denominated in shillings, foreign currency, or a hybrid of both. Earlier proposals for shilling-only contracts had alarmed investors who finance projects in dollars or euros. Under the hybrid structure, local operating costs and taxes will be paid in shillings, while financing and debt obligations can remain in hard currency.

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The reforms come amid heightened scrutiny of private power tariffs. In the year to June 2024, Kenya Power paid KSh 73.7 billion to IPPs—about 60% of all power purchase costs—despite the companies supplying just 41% of the electricity. Some private geothermal units cost as much as KSh 17.28 per kilowatt-hour, more than double KenGen’s KSh 8.24.

“We have agreed as a committee that any agreement must not go beyond 7 cents per kWh. We find that some of these IPPs are exploiting Kenyans by charging almost KSh 23 per kWh,” said Nakuru East MP David Gikaria.

Competitive auctions and stronger oversight

To curb runaway costs and curb opaque deal-making, MPs directed the Energy Ministry and the Energy and Petroleum Regulatory Authority (EPRA) to adopt competitive auctions for new power projects, similar to South Africa’s model. The auction system will replace bilateral negotiations that critics say saddled Kenya Power with expensive capacity charges—fees paid to power plants even when electricity is not dispatched.

All amendments or variations to PPAs will now require mandatory review by the Attorney General, closing loopholes that have historically allowed contract renegotiations to occur without full government oversight.

Rising demand spurs new investments

The reforms come as electricity demand continues to rise. In September 2025, Energy Principal Secretary Alex Wachira said power demand reached a peak of 2,362 MW on July 25, 2025—an increase of 250 MW over three years driven by industrial growth, urbanisation, and expanding household consumption. He noted that the motion to lift the moratorium was intended to support urgently needed new generation, including additional geothermal projects and ongoing imports of 200 MW from Ethiopia.

Investment Promotion PS Abubakar Hassan earlier said President William Ruto had already moved to allow captive and industrial power projects to proceed without relying exclusively on Kenya Power. “You can now generate power for your own use or for industrial parks,” he said.

PPAs typically combine capacity and output charges, ensuring stable revenue streams that help private investors secure financing. Officials say that while pricing structures will remain investor-friendly, the new transparency rules, flexible currency approach, and competitive auctions are expected to ensure consumers no longer shoulder the burden of costly contracts.

Implementation will be key

With the moratorium lifted and a raft of reforms now in motion, attention shifts to how rigorously the new rules will be enforced. The effectiveness of mandatory ownership disclosures, stronger oversight, and competitive procurement processes will determine whether the changes finally deliver lower power costs for households and businesses.

Author: Bryan Groenendaal

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