KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Associates
Local Registration Obligations A foreign entity seeking a licence under the Ener- gy Act is required to establish an office in Kenya and maintain such office until the expiry of the licence. Generation and distribution licences typically have a term of 25 and 20 years, respec- tively. Any entity that executes a project agreement under the Public Private Partnerships Act, including projects in the power sector, is required to establish a project company incorporated in Kenya in accordance with the Companies Act. Local Content Plan The Energy Act requires licensees to comply with the local content obligations, which include the preparation of a Long-Term Local Content Plan. The term “local content” is defined in the Act as the added value brought to the Kenyan economy from energy-related activities through systematic development of national capacity and capabilities, and investment in developing and procuring locally available workforce, ser- vices and supplies, for the sharing of accruing benefits. As such, the Local Content Plan should ensure that consideration is first given to services pro- vided within the county and to goods manu- factured in the country, where the goods meet the relevant specifications as prescribed by the Kenya Bureau of Standards (KEBS) or, in the absence of a Kenyan standard, any other inter- national standards acceptable to KEBS. The Local Content Plan should provide for qualified and skilled Kenyans to be given first considera- tion for employment at all levels of the value chain, and adequate provision should be made for the training of Kenyans on the job.
• KETRACO is 100% state-owned and is responsible for planning, design, construc- tion, ownership, operation and maintenance of electricity transmission lines (132kV and above). It is the designated system operator • Kenya Power is listed on the Nairobi Securi- ties Exchange. The government of Kenya holds a 50.1% stake in the entity, which serves as the main distributor and supplier of electricity in the country, accounting for approximately 95% of electricity sales. • REREC is wholly owned by the government of Kenya and is charged with the expansion of rural electrification. It is the lead agency responsible for the development of renewable energy resources (other than geothermal and large hydropower) and accounts for about 1.5% of generated electricity. On the investor side, IPPs currently account for approximately 37% of generated power from various technologies, including wind, solar, ther- mal, hydro, biogas and biomass. A total of 560 MW of captive power utilising thermal, solar and wind technologies is generated by over 90 pri- vate investors. Finally, there are privately owned distribution, supply and retail companies, mostly serving large-scale mixed use developments, including Tatu City and Two Rivers. 1.3 Foreign Investment Review Process Foreign investment is governed by the Invest- ment Promotion Act, 2004 and the Foreign Investments Protection Act, 1964. Kenya does not impose restrictions on foreign ownership in the power industry. Foreign inves- tors are permitted to fully participate in the gen- eration, transmission, distribution and supply segments, subject to compliance with general investment laws and regulatory approvals.
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