Lawmakers threaten to terminate US firm’s contract over exorbitant electricity charges » Capital News
NAIROBI, Kenya, Jun 7 – Members of the National Assembly are mulling terminating the contract between Kenya Power and the third biggest supplier of electricity supplier, Orpower Company Limited following their expensive utility cost.
The National Assembly Committee on Energy chaired by Mwala MP Vincent Musyoka has initiated the process by writing to the Ministry of Energy seeking details on the cost and consequences of the termination of the contracts.
Orpower is among the listed firms with high electricity tariffs that leads to high power cost which leads to high cost of living in the country.
The US owned firm is an independent power producer that generates 120 megawatts from its four geothermal wells in the Olkaria Three Complex with the firm charging Sh18.30 per kilowa1`tt while other firms like Sosian are charging 4.90 cents.
MPs questioned why the firm that got into the country’s market in 2000 continues to charge high electricity tariffs despite having recouped its initial investment cost which include geothermal well plants.
“How is it since 2000 you have retained the same electricity tarrif yet you have already recouped your investment. You have been in business for a long time and yet a number of companies that have entered the market recently are selling electricity for much less,” said Musyoka.
Kilifi South MP Ken Chonga pushed for the termination of the Public Private Partnership contract between Kenya Power and the US firm saying the high cost of power which burden the common mwananchi must be halted.
“We need justifications of why they should continue being in business with such huge electricity tariffs otherwise their contracts should be terminated,” Chonga said.
Orpower Company Legal advisor Lynn Alster, however, defended the firm, saying the electricity tariffs prices have remained the same since they have invested in updating and maximizing the geothermal plants for the last ten years.
“This is not the most expensive company selling geothermal power and we are here on the invitation of the government. We did our business and as an US firm we don’t do monkey business,” Alster stated.
Nambale MP George Mulanya however poked holes on the explanation issued by the US utility firm doesn’t hold water and explicity give reason why the firm should continue charging high electricity tarrifs having recovered their investment.
“It’s not the government that is complaining, its Kenyans that complained. When you tell us you are here because of the government that fine but that shouldn’t entitle you to charge high electricity tariff,” Mulanya remarked.
Legislators raised issues that the owned utility firm contract with Kenya Power has been amended over the years to favor them at the expense of Kenyans to ensure the electricity tariffs are not varied despite increased capacity.
The independent power producer produces 120 megawatts from its four geothermal plants making it the third biggest producer behind Turkana Wind Power and KenGen.
“Your contracts have interest such that amendments are made to favor you because you are having additional capacity yet the tariff means. We are not satisfied with the way this contract have been amended,”said the Mwala MP.
The Company’s legal advisor however insisted they are not willing to change the terms of the contract until they are paid their full payment owed to them by Kenya Power.
Kenya Power still owes them USD 60M having made partial payment in April this year but Orpower decried they haven’t been official commitment to reduce the debt.
“We have received partial payment on the reduction of the debt but we have received any program for the further reduction and removal of the debt,” said Alter.
Kenya Power paid the firm $ 12.4 Billion cutting its defaulted payment to the firm in the unpaid power purchases since last year.
About The Author
