Amit Zavery, the head of Google Cloud makes the point that we should “Think of digital transformation less as a technology project to be finished than as a state of perpetual agility, always ready to evolve for whatever customers want next.” The electricity sector in Kenya has been grappling with a plethora of challenges which are often met with a chorus of public outcry. Three of the most prominent issues are reliability, the high costs and accessibility. Digitalisation presents workable solutions for some of these challenges through digital tools such as smart meters, smart grid systems, and blockchain technology.
Our energy and natural resources lawyers deliver to our clients the focused, innovative sector advice they need, in Kenya and beyond.
We are entering an era of unprecedented demand for power generation and transmission, especially in East Africa. This dynamic, together with the challenges we all face from climate crisis, is creating new opportunities for alternative energies and new technologies.
Our energy clients receive coordinated, across-the-board coverage for their needs, including construction and projects, corporate, competition, regulatory, contractual, trading, litigation/arbitration, dispute resolution and tax issues. We understand the technical, geographical, commercial and geopolitical factors that shape the industry and have first-hand access to contacts, sponsors and decision makers.
IKM has been involved in numerous transactions pertaining to the energy sector, particularly those related to petroleum, geothermal, hydropower, solar, wind and coal. We also assist all participants in the oil and gas sector.
Experience has included advising:
- The sponsors of a USD1.8 billion energy project on the development of a 100 MW wind power plant in Kajiado, Kenya
- Senior lenders on the development and construction of a 140 MW geothermal power plant and related facilities in the Rift Valley region in Kenya and the sale of capacity and energy to the Kenya Power and Lighting Company
- An international oil and gas exploration and development company on its rights under a production sharing contract with the Kenyan government for the acquisition of on-shore exploration blocks
- Government of Kenya in a multibillion investment arbitration proceedings filed by Cortec Mining Kenya Limited at the International Centre for Settlement of Investment Disputes (ICSID)
- The government of an East African country on its oil and gas operations
- The senior lenders on a 981 MW coal-fired power plant in Lamu County, Kenya
- An international company on a grant of concessions over coal mines in Kenya
- The receivers appointed in respect of the sale of wind turbine generators and other assets from a company
- The sponsors on the financing of two 40 MW solar power projects
- Ranked Tier 1 in Projects & Privatization (The Legal 500 2019)
- Ranked Band 2 in Projects & Energy (Chambers & Partners 2019)
- Ranked in Projects & Finance (IFLR1000)
The call to take action against global warming is only getting louder, driven by the havoc in countries which have been on the receiving end of erratic weather patterns that endanger human life as well as property and adversely impact economies. The clarion call is for all countries to join forces to reduce emissions and keep global warming below the 1.5 degree celsius target which portends catastrophic effects if exceeded.
In his Mashujaa Day speech, President Uhuru Kenyatta promised that as part of the Government’s economic stimulus plan, there would be a reduction in the cost of electricity by 30% before the Christmas holiday. The President made reference to the John Ngumi led Taskforce on Review of Power Purchase Agreements that was set up to address concerns about the high cost of electricity, and which recently submitted its recommendations as to how the envisaged reduction of electricity costs could be achieved. The recommendations of the Taskforce include a raft of other reforms, some of which will likely have a ripple effect on investments in other sectors.
Countries across the world are increasingly moving towards energy auctions as the preferred method for procuring renewable energy. In fact, according to the International Renewable Energy Agency, the number of countries using energy auctions rose steadily from six in 2005 to sixty seven in 2016. The shift has largely been attributed to the benefits of power auctions, including their ability to assist governments with price discovery, lower costs of power generation and flexibility.
Having concluded in Part 1 of this two part series, that the power sector challenges are like a tangled ball of wool, allow us to pick some threads out and take a closer look at some of the pieces of the puzzle.