Are Power Purchase Agreements Set For Renegotiation?

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).

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;