KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Asssociates
• KenGen is 70% owned by the government of Ken- ya and is listed on the Nairobi Securities Exchange. It accounts for slightly over 54% of electricity generated. • Geothermal Development Company (GDC) is wholly owned by the government and was estab- lished to carry out geothermal exploration, produc- tion drilling and management of steam fields. • Nuclear Power and Energy Agency (NUPEA) is wholly owned by the government and is respon- sible for overseeing research and development of nuclear electricity generation in Kenya. • KETRACO is 100% state-owned and is responsible for the planning, design, construction, ownership, operation and maintenance of electricity transmis- sion lines (132kV and above). It is the designated System Operator. • Kenya Power is listed on the Nairobi Securities Exchange, with the government of Kenya holding a 50.1% stake in the entity. It 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 serves as the lead agency respon- sible for the development of renewable energy resources (other than geothermal and large hydro- power), 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, thermal, hydro, biogas and biomass. Furthermore, a total of 560 MW of captive power utilising thermal, solar and wind technologies is generated by over 90 private inves- tors. 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 Foreign investment in Kenya is governed primarily by the Investment Promotion Act (Cap. 485) and the Foreign Investments Protection Act (Cap. 518), which collectively establish the legal framework for the entry,
protection and facilitation of foreign capital. Kenya maintains a broadly liberal investment regime, notably with no sector-specific restrictions on foreign own- ership in the power industry. Foreign investors may therefore participate fully in generation, transmission, distribution and supply activities, subject to compli- ance with licensing requirements under the Energy Act and approvals from the Energy and Petroleum Regula- tory Authority (EPRA). Local Registration Obligations Despite the absence of ownership restrictions, for- eign investors must comply with certain local estab- lishment requirements. Any foreign entity seeking a licence under the Energy Act is required to establish and maintain a registered office in Kenya for the dura- tion of the licence. In practice, generation licences typically extend for approximately 25 years, while dis- tribution licences average 20 years, requiring long- term local presence. Where projects are implemented through public-pri- vate partnerships (PPPs), the Public Private Partner- ships Act (Cap. 430) requires investors to incorporate a special purpose project company in Kenya under the Companies Act. This ensures that the project has a locally registered vehicle for regulatory compliance, taxation and contractual accountability. Local Content Plan The Energy Act imposes local content obligations on licensees, requiring the preparation and implementa- tion of a Long-Term Local Content Plan. Local content is defined as the value added to the Kenyan economy through the use of local labour, goods, services and capacity development. Under this framework, licen- sees are expected to prioritise: • locally manufactured goods and services, where they meet the standards set by the Kenya Bureau of Standards (KEBS); • employment of qualified Kenyan personnel across all levels of the project value chain; and • capacity building, including on-the-job training and skills transfer to Kenyan workers. The proposed Local Content Bill, 2025 seeks to fur- ther strengthen these requirements by introducing
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