KenGen eyes direct sales to escape Kenya Power's debt trap
Business
By
Brian Ngugi
| Feb 25, 2026
Kengen Managing Director Peter Njenga and Chairman Alfred Agoi during the Extraordinary General Meeting. [Wilberforce Okwiri, Standard]
Kenya Electricity Generating Company (KenGen) is prepared to bypass the national utility Kenya Power and sell electricity directly to industrial consumers.
But the state-owned generator remains stuck in a holding pattern as regulators delay the final rules needed to end a decades-long monopoly.
While the Energy Act of 2019 legally ended the era of a single buyer, KenGen, which provides roughly two-thirds of Kenya's power, is still restricted to selling exclusively to Kenya Power, the country’s sole off-taker (the entity obligated to buy the power).
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KenGen confirmed it is ready to pivot to direct sales as soon as the Energy and Petroleum Regulatory Authority (EPRA) operationalises "open access" provisions.
"We are certain that when the regulations by EPRA are ready and proper guidelines are issued, that possibility will be there," said KenGen.
Under the proposed Energy Regulations 2024, industrial customers consuming 1 MVA (Mega Volt-Ampere) or more would be allowed to source electricity directly from generators.
This would allow KenGen to capture higher-margin revenue from factories while paying wheeling charges, essentially a toll fee, to use Kenya Power’s existing transmission lines.
KenGen insiders reckon the push for market liberalisation is not just about growth but also about survival.
This is because KenGen’s financial health is increasingly tied to the precarious balance sheet of troubled Kenya Power.
As of June 2025, the utility owed KenGen Sh16.65 billion. Payments are currently averaging 113 days, nearly triple the agreed 40-day credit window, underlining the crisis.
Auditor-General Nancy Gathungu has previously warned that these chronic delays threaten KenGen's working capital.
To account for the risk, KenGen was forced to increase its expected credit loss allowance, money set aside to cover potential bad debts, by 78 per cent, reaching Sh830.99 million specifically for Kenya Power’s arrears.
Total impairment provisions for unpaid bills reached Sh1.37 billion in the 2025 financial year.
While Kenya Power made a Sh5.2 billion payment last year and paid Sh303.7 million in interest penalties for late settlement, its total debt remains stubbornly high, closing the year at Sh17.71 billion.
The transition is stalled at the desk of the regulator.
EPRA Director-General Daniel Kiptoo had not responded to The Standard'S queries regarding the specific timeline for finalising the rules by the time of going to press.
Industry players, including Independent Power Producers (IPPs), private companies that generate electricity, have been petitioning Parliament since 2023 to force the implementation of the open access framework.
The Kenya Association of Manufacturers has also championed the move, hoping direct competition will lower high industrial tariffs that currently hamper regional competitiveness.
However, the "Electricity Market, Bulk Supply and Open Access" regulations published in 2024 have yet to be fully implemented.
At the same time, complex renegotiations of Power Purchase Agreements (PPAs) between Kenya Power and private generators remain pending at the Treasury, leaving the market in a state of limbo.
Kengen insiders reckon that, despite an aggressive diversification drive which has seen it bag lucrative regional consultancy work in Ethiopia and Djibouti, the state-owned energy producer remains captive to its sole, cash-strapped domestic customer, Kenya Power.