Kenya wants to buy power from Uganda

Discussions are on to terminate the electricity swap deal between Kenya and Uganda and replace it with an outright purchase from the neighboring nation that is still producing abundant electricity.

Nairobi has made contact with Kampala to convert the agreement into a Power Purchase Agreement (PPA), which will resemble a contract that Nairobi has with Ethiopia.

Kenya and Uganda have a power exchange agreement whereby the nation that imports more from the other pays at the end of a specified time through their state-owned energy distribution firms.

A greater availability of hydropower, the least expensive energy source in the nation, is essential to reducing the nation’s reliance on polluting thermal plants and bringing down electricity prices overall.

“Uganda today has extra power after completing two large hydropower plants. “Kenya Power and its Ugandan counterpart are in talks to lock in this excess power through a PPA,” the Energy and Petroleum Regulatory Authority’s director general, Daniel Kiptoo, stated on Thursday.

The most recent effort to turn the exchange agreement into a PPA was prompted by Kenya’s net import status due to generation deficiencies in the agreement with Uganda.

Between January and March of this year, Kenya bought 55.85 million power units from Uganda and exported a pitiful 10.65 million units during that same time frame.

The amount of electricity imported reached a record high of 408.78 Gigawatt-hours (GWh) between January and March of this year, with Ethiopia providing the majority of the power.

In order to support higher generation from Ethiopia’s dams and geothermal sources and assist reduce consumer bills, Kenya has increased imports from Ethiopia at the same time that the PPA with Uganda is being moved forward.

For instance, buyers are receiving 16.5 units for Ksh500, up from 16.1 units for the same amount last month, and Ksh1,000 is currently fetching 32.9 units, up from 32.2 last month.

In the national system, locally produced hydropower is the least expensive, retailing for Ksh3.83. Geothermal power is next, priced at Ksh10.28, while imported hydroelectricity is priced at Ksh10.69 as of February of this year.

Ethiopia and Kenya currently have a 25-year power purchase agreement (PPA) at a price per kilowatt of $0.065 (Sh8.6). Kenya will, however, be permitted, in accordance with the agreement, to renegotiate the rate starting in 2027.

The proposed PPA between Kenya Power and the Uganda Electricity Distribution Company Limited (UEDCL) does not, however, specify the pricing or the duration of its validity.