The Energy (Amendment) Bill, 2023
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Executive
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Final
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Beneficial Ownership Disclosure Made Mandatory
Energy purchase agreements can only be entered into with generating entities that have registered and disclosed their full beneficial ownership under the Companies Act (Act No. 17 of 2015). Purchasing entities must publish this register of beneficial ownership on their websites and in their annual audit reports within ninety days of the section's commencement.
Feasibility Studies Required Before Power Procurement
Before procuring electrical power, purchasing entities are mandated to conduct a feasibility study to identify whether there is sufficient local electricity demand that cannot be met by existing production. All procurement must comply with the Public Procurement and Asset Disposal Act (Act No. 33 of 2015).
Green Energy and Base Load Given Priority
Purchasing entities must structure energy purchase agreements to give priority to dispatchable generation with a sustainable base load at the point of dispatch, as well as to generating entities producing energy through renewable technologies.
Public Registry for Power Purchase Contracts
Purchasing entities must maintain a physical and digital registry of all active energy purchase agreements and their beneficial ownership. This register must be open to public inspection in accordance with Section 5(1)(e) of the Access to Information Act (Act No. 31 of 2016).
Bill No.
Senate Bills No. 42
Gazette No.
Supplement No. 162
Sponsor
Sifuna Edwin Watenya
Background
The Energy (Amendment) Bill, 2023 seeks to amend the Energy Act, 2019 (Act No. 1 of 2019) to introduce robust transparency and accountability mechanisms in energy purchase agreements (EPAs). By enforcing public disclosure of beneficial ownership information for power generators, the bill aims to prevent tax evasion, money laundering, and corruption, while protecting consumers from high electricity prices resulting from financially unsound contracts.
Key Amendments
The Bill inserts a new Section 134A into the Energy Act, 2019:
- Energy Purchase Agreements: Permits generating entities to enter into agreements to sell electrical energy to licensed purchasing entities listed in the Third Schedule.
- Constitutional Compliance: Mandates that all energy purchase agreements adhere to public finance principles under Article 201 of the Constitution, which include openness, accountability, public participation, sustainability, and prudent use of public funds.
- Regulatory Veto Power: Section 134A(7) explicitly bars the Energy and Petroleum Regulatory Authority from approving any energy purchase agreement that does not comply with the requirements of this section.
New Obligations
The Bill establishes strict pre-contractual and post-contractual duties on both purchasing and generating entities:
- Feasibility and Demand Assessment: Purchasing entities must conduct a feasibility study prior to procurement to confirm that existing local energy production cannot meet current demand.
- Procurement Compliance: Procurement processes must strictly follow the procedures set out in the Public Procurement and Asset Disposal Act (Act No. 33 of 2015).
- Priority Grid Dispatch: Purchasing entities must prioritize dispatchable generation with a sustainable base load at the point of dispatch, and give priority to generating entities that use renewable technology.
- Beneficial Ownership Disclosure: Energy purchase agreements are restricted to generating entities that have fully disclosed and registered their beneficial ownership in accordance with the Companies Act (Act No. 17 of 2015).
- Public Register Creation: Purchasing entities must establish a register of all generating entities under contract and their beneficial ownership within ninety days of the section's commencement. This register must be published on the entity's website, included in its annual audit report, and made available for public inspection under Section 5(1)(e) of the Access to Information Act (Act No. 31 of 2016).
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