Kenya to re-negotiate power agreement with Ethiopia

NAIROBI, Kenya - The Republic of Kenya is reportedly contemplating renegotiating the power agreement with Ethiopia after 25 years of a smooth Power Purchase Agreement (PPA) which was first signed by former President Daniel Arap Moi, who died four years ago.

The decision is informed by the deepening electricity crisis which is triggered by high rates from Addis Ababa. Ethiopia is a major hydroelectric power supply in East Africa after Uganda and Kenya heavily rely on them.

The Energy and Petroleum Regulatory Authority (EPRA) has cited concerns that the escalating energy situation in Addis Ababa poses a risk to Nairobi's power supply, potentially necessitating a review of the agreement signed in July 2022, The African reports.

However, Ethiopia is yet to be formally notified of the impending changes, although contractual obligations are set to change concerning the potential risk to Kenya's power security. Kenya depends majorly on electric power but Wind Power and Geothermal energy are also essential in supply.

If Ethiopia fails to deliver the agreed-upon power, Kenya may need to renegotiate the deal, despite paying damages for breach of contract. The earliest possible renegotiation is in 2027.

The power deal aimed to provide affordable electricity to meet Kenya's peak demand by reducing reliance on expensive sources. However, concerns arise as Ethiopia grapples with a significant electrification deficit, causing widespread outages and weak access in rural areas.

To address this, the World Bank has launched a $1.4 billion program over 10 years to strengthen Ethiopia's electricity network, improve sector viability, and boost renewable energy generation. The initiative aims to enhance access for the half of the population still lacking reliable, TheAfrican adds.

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