World Bank Links Kenya's High Electricity Costs to Questionable Power Deals

A recent World Bank report has found that Kenyan households and commercial enterprises are paying significantly higher rates for electricity compared to their regional and international peers. The report, detailed in the November 2026 Kenya Economic Update, highlights that commercial entities in Kenya shoulder electricity costs that are nearly 50 percent higher than those paid by competitors in Uganda and more than double the rates in Vietnam.

According to the World Bank, commercial users in Kenya pay an average of Ksh 22.60 per kilowatt-hour, compared to Ksh 15.20 in Uganda and Ksh 10.10 in Vietnam. Residential households face an even steeper burden, paying an average of Ksh 28.40 per kilowatt-hour in Kenya, compared to Ksh 22.20 in Uganda, Ksh 15.40 in Morocco, and Ksh 10.10 in Vietnam. This has resulted in increased costs for businesses and households.

The World Bank report identifies opaque contracts and non-competitive bidding as a central cause of the inflated tariffs. Many Power Purchase Agreements (PPAs) negotiated between Kenya Power and Independent Power Producers (IPPs) include strict clauses that guarantee payments to private producers even when the generated power goes unutilized. Furthermore, competitive market dynamics were systematically bypassed in the procurement process.

Out of 42 PPAs evaluated in the report, only 24 percent were awarded through competitive procurement processes, leaving the vast majority established through direct negotiations. This lack of competition has contributed to the high cost of electricity in Kenya. The report also notes that governance vulnerabilities and conflicts of interest inside the energy framework are major concerns.

The World Bank pointed to clear governance vulnerabilities and conflicts of interest inside the energy framework. “For several IPPs, public officials involved in the approval of the projects were later employed by or owned relevant generation companies, raising concerns about conflicts of interest,” the bank disclosed. This has raised concerns about the integrity of the procurement process.

Compounding the financial burden, Kenya loses over 23 percent of its total generated power during transmission and distribution before it ever reaches end consumers. Despite importing cheaper supplementary power from regional neighbors like Uganda and Ethiopia, these structural inefficiencies prevent reduced production costs from benefiting local consumers, ultimately squeezing business margins and driving up the cost of living nationwide.

The World Bank's findings have significant implications for Kenya's energy sector. The report's recommendations aim to address the governance failures and procurement irregularities that have contributed to the high cost of electricity.

Key points

• Kenyan commercial users pay an average of Ksh 22.60 per kilowatt-hour, compared to Ksh 15.20 in Uganda and Ksh 10.10 in Vietnam.
• Only 24 percent of PPAs were awarded through competitive procurement processes.
• Kenya loses over 23 percent of its total generated power during transmission and distribution.