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The Case of the Kenyan Power Sector and Legal and Regulatory Framework

By

Dr. B. Okech and Mr. P. Nyoike


Introduction

This paper has been developed from a study which undertook a literature review and power sector overview with a Kenyan Power Sector as a case study while however taking cognisance of both relevant regional and international context. Drawing, therefore, from the information and finding from the study the paper attempts to identify the type of environment in place and what emerges with ongoing power sector reforms and liberalisation being undertaken to attract participation of independent power producers (IPPs).

The Kenyan electric power sector remains one of the most complex sectors of its kind in the region. It depends on power generated from different parts of the country using different types of technologies as determined by the type of sources being exploited. Table 3.1 and 3.2 shows this sources by type and installed capacity. Although the bulk of power consumed in the country are generated within, Kenya still depends on a limited power supply from Uganda which accounts for merely about 15% of the total national capacity.

Furthermore, the sector depends on transmission and distribution network which covers the whole country in supply of electricity to consumers in the country. The network consists of power lines of different capacity and lengths as well as transformers of various capacity and function (see Kenya Power & Lighting Company (KPLC) Annual Reports and Accounts).

However, in the effort to conform to the emerging market and socio-economic requirements which compel reform and privatization of most economic activities and markets, the Kenyan Government has made considerable progress in the area of power sector reform attracting private sector participation both in absolute terms and in relation to the countries in this region. So far, we have witnessed the disintegration and consolidation of a number of operations and segments in the sector. For instance, the KPLC has divested itself from the power generation segment, marking a significant vertical disintegration in the power sector. And also Kenya Electricity Generating Company (KenGen) remains purely as a power generator in the sector, where its involvement represents the interest of the public sector in the sector within the country, as this organization remains fully owned by the government while operating within commercial principles. In this capacity it acquired the assets and liabilities as well as responsibilities of the public institutions which hitherto operated in the power sector.


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