Regulatory and Competition–Related Reforms in Kenya’s Power and Petroleum Sectors

"Kenya embarked on a process to reform its energy sector in earnest after mid-1990. The enactment of the Electric Power Act, 1997 and later the Energy Act, 2006 set the stage for reform in the two energy sub-sectors. The two legislations laid the foundation for separating the roles of generation of electricity from transmission and distribution of electricity sector. The laws also paved the way for the liberalisation of the procurement, distribution and pricing of petroleum products in the country. The reforms essentially entailed breaking up state corporations in the power and petroleum sub-sectors that were then deemed as monopolies and unable to deliver quality at reasonable market prices. Further, an industry regulator – the Energy Regulatory Commission – was set up to police the companies that were set up under the new laws. These changes were expected to improve service quality in a cost effective manner, provide an innovative environment and stimulate efficient investment in the energy infrastructure. However, the attainment of the above expectations faces several challenges. For instance, the cost of power has remained high despite regulation. Due to the capital intensive nature of the industry, few firms have entered the liberalised power generation industry in Kenya, with the main producer being a quasi government firm (KenGen). Kenya Power remains the sole distributor of electricity in the country. Similarly, the reforms in the petroleum sub-sector have not yielded desired results despite measures, which allowed greater participation of the private sector, particularly in the importation, distribution and supply services."