THE ENERGY (AMENDMENT) BILL, 2023
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Mandatory Feasibility Studies Prior to Power Procurement
Before entering into any energy purchase agreement, a purchasing entity must conduct a feasibility study to verify that there is sufficient electricity demand that cannot be met by existing generation capacity.
Mandatory Beneficial Ownership Disclosure
Purchasing entities are prohibited from entering into energy purchase agreements with generating entities unless those entities have fully disclosed and registered their beneficial ownership in line with the Companies Act (Act No. 17 of 2015).
Prioritizing Renewable and Sustainable Base Load Energy
When procuring electrical power, purchasing entities must prioritize dispatchable generation with a sustainable base load at the point of dispatch, and give priority to generating entities utilizing renewable energy technology.
New Public Register of Agreements
Purchasing entities must compile, maintain, and publish a register of all energy purchase agreements and the beneficial ownership details of the contracting entities. This register must be completed within 90 days of the section's commencement, published on the entity's website and annual audit report, and made available for public inspection under the Access to Information Act (Act No. 31 of 2016).
Bill No.
Bill No. 42 of 2023
Gazette No.
Supplement No. 162 of 2023
Background
The Energy (Amendment) Bill, 2023, seeks to amend the Energy Act (Act No. 1 of 2019) to enhance transparency, accountability, and commercial sustainability within Kenya's electricity procurement framework. By establishing stricter guidelines for energy purchase agreements (EPAs), the Bill seeks to protect public funds and align power procurement with constitutional requirements.
Key Amendments
Insertion of Section 134A in Act No. 1 of 2019
The Bill inserts a new Section 134A immediately after Section 134 of the Energy Act, introducing a comprehensive regulatory mechanism for energy purchase agreements:
- Authorized Agreements: A generating entity may enter into an energy purchase agreement to sell electrical energy to a licensed purchasing entity specified in the Third Schedule.
- Constitutional Alignment: Every energy purchase agreement must comply with the public finance principles outlined in Article 201 of the Constitution, which dictate openness, accountability, public participation, good governance in the use of public funds, and long-term sustainability.
- EPRA Approval Restrictions: Under Section 134A(7), the Energy and Petroleum Regulatory Authority (EPRA) is explicitly prohibited from approving any energy purchase agreement that fails to comply with the requirements of this section.
New Obligations
For Purchasing Entities
- Feasibility Studies: Prior to the procurement of electrical power, purchasing entities must conduct a feasibility study to identify whether there is sufficient electricity demand that existing production cannot satisfy.
- Procurement Rules: Entities must ensure that the procurement process complies strictly with the Public Procurement and Asset Disposal Act (Act No. 33 of 2015).
- Grid Priorities: Priority must be given to dispatchable generation with a sustainable base load at the point of dispatch, as well as generating entities utilizing renewable energy technologies.
- Public Registry: Purchasing entities must prepare and maintain a register of contracted generating entities and their beneficial ownership. This register must be compiled within 90 days of the commencement of Section 134A, published on the purchasing entity's website and in its annual audit report, and made accessible for public inspection under Section 5(1)(e) of the Access to Information Act (Act No. 31 of 2016).
For Generating Entities
- Beneficial Ownership Disclosure: Generating entities must fully disclose and register their beneficial ownership in accordance with the Companies Act (Act No. 17 of 2015) before they can enter into an energy purchase agreement.
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