MEy Sessional Paper No 4 of 2004 on Energy

The aspiration of this Sessional Paper on Energy is to lay the policy framework upon which cost-effective, affordable and adequate quality energy services will be made available to the domestic economy on a sustainable basis over the period 2004-2023. This Sessional Paper recognizes that the success of socio-economic and environmental transformation strategies pursued by the Government at present and in the future is to a large extent, dependent on the performance of the energy sector as an economic infrastructure. This Sessional Paper therefore articulates the current and future policies to realise these growth strategies.

The challenges facing the energy sector today and as enumerated in this Sessional Paper include, inter alia, a weak power transmission and distribution infrastructure due to limited investments in power system upgrading. As a consequence, the economy has been experiencing high electric power system losses estimated at 20% of net generation, extreme voltage flunctuations and intermittent power outages at 11,000 per month, which cause material damage and losses in production. These power system weaknesses coupled with the high cost of power from independent power producers (IPPs) contribute to high cost of doing business in Kenya. Other power sub-sector challenges include low per capita power consumption at 121 kWh and low countrywide electricity access at 15.3% of the total population and 3.8% of the rural population.

The petroleum industry is, on the other hand, constrained by limited supply facilities for fuels including LPG, domestic production of motor fuels which do not meet international quality standards, inadequate distribution infrastructure in the remote parts of the country which contribute to high product prices, price leadership which inhibits competition, and insufficient legal and regulatory framework to guide sub-sector operations in consonance with international best practices for liberalized markets, thus exposing the public to health, environmental and safety hazards. In addition and as a result of the inadequacies in the legal and regulatory framework, the sub-sector has witnessed proliferation of substandard fuel dispensing facilities, and under dispensing of products including mixing of motor fuels with kerosene and dumping of export fuels for illicit financial gains at the expense of both the consumer and Government revenue.