State-owned Kenya Power will be able to renegotiate the power purchase rate with Ethiopian Electric Power (ECC) only after five years, Business Daily newspaper reported.

The fixed rate is 6.5 US cents per kilowatt.

Kenya signed a 25-year deal with Ethiopia to start importing electricity from next month to ensure buffers meet peak demand.

High rates by independent power producers have squeezed Kenya Power’s ability to reduce electricity costs.

According to the report, Kenya Power buys the bulk of electricity from Kenya Electricity Generating Company (KenGen) at 5.3 Shillings per kilowatt-hour, but other independent power purchasers (IPPs) have priced their power as high as 195 Shilling for the same unit.

KenGen provides 70% of the electricity supplied to Kenya Power, with the 21 IPPs giving the balance.

Electricity charges rose nearly 16% in September, as domestic consumers are charged 25.3 Shillings per kilowatt-hour for more than 100 units a month.

(Editing by Seban Scaria seban.scaria@lseg.com)