The US electricity company Orpower Company Limited has been threatened with termination by MPs due to what they refer to as “unjustified expensive tariffs.”
Since 2000, the company has provided Kenya Power with electricity.
Documents submitted to the National Assembly’s Energy Committee reveal that the company has been selling electricity for Sh18 per kilowatt, while other suppliers charge Sh7.
The group led by Mwala MP Vincent Musyoka questioned the company’s senior executives to provide an explanation for their exorbitant fees.
The MP for Kilifi South, Ken Chonga, described the public-private partnership between Kenya Power and the US company as an unnecessary burden on taxpayers and called for its termination.
We need justifications of why they should continue being in business with such huge electricity tariffs otherwise their contracts should be terminated,” he declared.
The group led by Musyoka has been investigating the nation’s high electricity prices.
The committee has sent a letter to the minister of energy asking for an estimate of the costs associated with terminating the agreement.
The US-based company is one of those mentioned as having high electricity rates, which drives up the cost of power for most Kenyans.
The Olkaria III Complex’s four geothermal wells provide the company with 120 megawatts of power.
Musyoka questioned why, even after covering its initial investment cost, which is usually taken into account when calculating the selling cost of power, the company has not felt it appropriate to reduce its costs.
He asked,“How is it since 2000 you have retained the same electricity tariff, yet you have already recouped your investment?”
“You have been in business for a long time and yet a number of companies that have entered the market recently are selling electricity for much less.”
In defense, Lynn Alster, a legal advisor for Orpower, stated that the high cost is a result of the enormous expenses they invest in modernizing and optimizing the geothermal facilities.
“We are here at the government’s invitation and this is not the most expensive company selling geothermal power.” Alster said the committee, “We conducted our business and, as a US firm, we don’t do monkey business.
George Mulanya, a Nambale MP, rejected the explanation and insisted that the tariffs be lowered.
“It’s not the government that is complaining, its Kenyans that complained. When you tell us you are here because of the government that fine, but that shouldn’t entitle you to charge high electricity tariff,” he remarked.
The company’s legal counsel responded by insisting that they won’t evaluate the pricing until Kenya Power pays them the Sh60 million debt it owes them.
To find out how much the country will lose by ending the deal, the committee will meet with the minister of energy.
