KenGen Moves to End KPLC Power Distribution Monopoly

Kenya Electricity Generating Company (KenGen) has initiated a regulatory process to secure a retail power distribution licence, a move that directly challenges the decades-long market dominance of Kenya Power and Lighting Company (KPLC).

The state-backed generator filed its formal application with the Energy and Petroleum Regulatory Authority (EPRA), seeking clearance to bypass the single-buyer model, which has historically forced all power producers to sell their output exclusively to KPLC.

This legislative window opened under the Energy Act of 2019, which effectively liberalised the retail electricity market, but implementation has faced persistent delays.

KenGen intends to target commercial consumers first.

Large commercial operations, particularly industrial zones, have often complained about high retail tariffs and unpredictable grid reliability under the current single-supplier system.

If approved, the licence will allow KenGen to sign direct power purchase agreements with these bulk consumers, altering the economics of industrial manufacturing and infrastructure development across the country.

The operational strategy involves leveraging its existing geothermal and hydroelectric generation hubs.

By establishing direct supply corridors, the utility hopes to lower distribution costs for manufacturing clusters, though it will initially rely on KPLC infrastructure for transmission under a wheeling agreement framework.

Negotiations regarding transmission grid usage fees are expected to follow, if EPRA approves the initial retail application.

Industrial players have welcomed the development, noting that energy security remains a critical bottleneck for regional manufacturing growth.

Kenya Power has faced increasing financial pressure from system losses and aging transmission infrastructure, which frequently triggers nationwide blackouts.

The Ministry of Energy has previously indicated support for gradual market liberalisation, although officials remain cautious about the financial implications for KPLC, which carries significant debt obligations tied to its current distribution network.

KenGen executives have stated that the application marks a structural transition for the utility, moving it from a pure bulk generator to an integrated power supply company.

The application remains under review by EPRA, which must conduct public participation exercises before rendering a final decision on the application.