Private companies in Kenya are set to venture into the electricity distribution sector and will be allowed to import power from neighbouring countries for local resale. This move, proposed by the Energy and Petroleum Regulatory Authority (Epra), aims to enhance competition, drive down wholesale tariffs, and improve service delivery to consumers. By expanding choices for power distributors, it is expected to intensify competition on wholesale tariffs, leading to potential reductions in power costs for consumers.
Currently, only Kenya Power has the authority to engage in electricity import agreements with foreign producers. However, under the draft EnerPrivate firms to import electricity for resale locally Electric Power Undertaking Licensing Regulations, 2024, new entrants can apply for licenses to import electricity for resale domestically or export power to other nations. This regulatory framework also requires firms to obtain approval for the tariffs they intend to charge consumers.
The government is offering various licenses to new players in the electricity sector, including those for electricity generation, transmission infrastructure operation, and retail supply for billing and revenue collection.
The draft regulations signify a shift towards breaking Kenya Power’s long-standing monopoly by allowing firms to utilize the distribution and transmission networks of Ketraco and Kenya Power. Nonetheless, these new entrants will be subject to wheeling charges for using the transmission system. Proposed regulations also stipulate that license renewals must be applied for at least three years before expiry.
The draft regulations, pending adoption by Parliament, aim to enhance competition in the sector and provide more options for consumers in Kenya’s evolving electricity market.
