Kenya: Household Energy Sector Governace

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A Household Energy Demand and Use
B Household Energy Supply
C Household Energy Sector Governace
D Household Energy Information

C. Household energy sector governance

C.1 Introduction

(As with most/all the countries under consideration), governance of energy policy for low-income groups is dealing with a complex picture that includes the following elements. The largest group of users relies heavily on non-commercial (wood, dung, crop residues), but mixed with some use of commercial fuels. The supply and distribution of these commercial fuels is set up primarily to meet the demand by the better-off and industry (especially LPG and electricity), with kerosene in a more intermediate situation. Improving access and supply to low-income groups requires some stimulation of demand, etc., although is subject complex influences now - for example including both the reduction of subsidy and the drive towards credit, facilitating access through deregulated distribution, etc. External financial and political influences are important, for example in de-regulation, etc. Another factor that is difficult to define is the efficiency of the administration of services. Take electricity for example, the Kenya Power and Lighting Company, a state owned monopoly has been estimated to cost the economy KSh60 billion (US$846m) annually due to its inefficiency to meet the growing electricity demand. The poor state of the distribution and transmission infrastructure resulting in losses exceeding 21 per cent and costing Kenyan consumers Sh2.1 billion ($30m) annually is also attributed to poor administration of services.

C.2 Household energy sector governance structure

Some eight different Ministries (Energy, Environment and Natural Resources, Agriculture and Rural Development, Information Transport and Communication) and other organisations (National Environment Secretariat, The Forestry Department this part of a ministry?, Kenya Forestry Research Institute) are responsible for the governance of energy, forests and the environment in respect of low-income groups in Kenya. Although there are a range of policy initiatives aimed at the supply, conservation and distribution of various energy sources, it is recognised that there is duplication of responsibility and that co-ordination could be improved.

The electricity industry has multiple producers, with generation overseen by the Electricity Regulation Board, with transmission and distribution managed by Kenya Power and Lighting.

C.3 Government policies/programmes

Among the most important policy and programmatic issues in respect of household energy for low-income groups in Kenya, are:

  • Wood fuel is produced from government forests, rangelands and small farms. Recent years (under the Kenya Forestry Master Plan of 1994) have seen an increase in agro-forestry on small farms, so that this is now the single largest producer at nearly 50%. Subsidies continue to be used in respect of government forests however, which has restricted the growth of commercially run plantations.
  • The policy 'environment' in respect of charcoal is somewhat contradictory: as noted above, this fuel is used widely in the urban areas and there is active trading, yet production is not officially recognised as legitimate. Nevertheless, distributors wishing to transport charcoal require a movement 'permit'. Co-ordination of policy in respect of production, supply and protection of the environment is unlikely in these circumstances.
  • There has recently been a liberalisation of the petroleum markets in Kenya, which has had a number of impacts. The price of kerosene has increased (in part due to a tax increase in June 2002), with a fall in demand - kerosene is now seen as less affordable by the poor. On the other hand, liberalisation (together with availability of small bottles and credit) has increased the use of LPG - but, this remains a fuel used by a small (and mainly urban) minority.
  • The Rural Electrification Programme (REP) was introduced in 1973 to promote access for low-income homes, and is funded by a mix of external (loans) and internal revenue. Although demand is reported to be high, in 2000 only 3.8% of rural homes had access to electricity, and both the electricity and appliances are seen as too costly. Due to the restrictions in generation with the Kenya Power Company operating under Kenya Power and Lighting Company for a long time as a monopoly for electricity generation and distribution, electrification levels remained below demand and distribution limited to a few areas. Until the late 1990's KPLC was a monopoly. Upon liberalisation of the industry, Kenya Power Company part of KPLC became independent and was transformed to Kenya Generating Company. A few other independent power producers have been established in the country. This has increased the generating capacity. KPLC however, has remained a monopoly as the sole distributor of electricity. It has been unable to meet the demand for electricity supply in rural areas. Issues of corporate governance at KPLC have been raised with regard to the management. The Government policy on distribution of electricity has backed KPLC's monopolistic behaviour. Advocacy to change this policy is currently underway in the country.
  • There have been a number of policy initiatives in respect of renewable energy, improved stoves, etc., but these appear to be - in practice - piecemeal and not very effective.

C.4 Summary and conclusions

The governance of energy, particularly for low-income groups, is shared across too many government departments and agencies - at least with insufficient co-ordination. Probably the most significant policy change in recent years, is the liberalisation of the petroleum market, which has pushed up the price of kerosene (with a resulting reduction in demand between 1999 and 2000), but improved the supply of and access to LPG - though only for relatively very small numbers of low income homes. Despite the existence of a specific programme, rural electrification appears to be progressing very slowly, partly due to the high cost of work in network extension and inadequate budgetary allocations of the government implementer (KPLC) - to penetrate the rural areas. Other reasons for the failure include the monopolistic nature of KPLC, which makes the cost of transmission and distribution prohibitive to rural households, and poor cost recovery from rural areas. The REP could be made more effective by institutionalising an independent body and there is provision for this in the draft energy policy to implement the REP and liberalising distribution paving the way for decentralised energy systems.

The official policy on charcoal production appears to be at odds with the reality of commercial trade and utilisation of this fuel, which (while probably pragmatic in the short-term) would seem counter-productive over a longer time-scale. Other areas of policy on energy for the poor, forestry, renewable energy and conservation, and improved stoves, appear to be of limited effectiveness, even though some policy exists for most of these issues.
Last edited by Miriam Hansen .
Page last modified on Sunday September 19, 2010 17:39:38 GMT.
  • A practitioner's journal on household energy, stoves and poverty reduction.