Review of the Energy Act, 2019

Review of the Energy Act, 2019

The Energy Act, 2019 (the Act) came into effect on 28^th March 2019 this year, repealing the Energy Act, 2006 (the Repealed Act), the Kenya Nuclear Electricity Board Order No. 131 of 2012 and the Geothermal Resources Act, 1982. The Energy Act has consolidated the laws relating to energy in Kenya.

The following are the key provisions captured by the Act and the repealed Energy Act, 2006:

	KEY POINTS	ENERGY ACT 2006	ENERGY ACT 2019
1.	Government Obligations	The Repealed Act did not contain provisions on energy policy and integrated energy plan.	The Government shall facilitate the provision of affordable energy services to all persons in Kenya.The Cabinet Secretary shall therefore develop and implement a strategy to ensure that all households are connected to a supply of electricity by 2030.
2.	Promotion of Energy Investments	The Repealed Act did not contain provisions on energy policy and integrated energy plan.	The National and County Governments shall facilitate the acquisition of land for energy infrastructure development in accordance with the law.
ENERGY ENTITIES
3.	Energy and Petroleum Regulatory Authority (EPRA)	Formerly called the Energy Regulatory Commission (ERC). The rights, duties, obligations, assets and liabilities of the ERC which subsisted prior to the Act coming into force will automatically be transferred to the Energy and Petroleum Regulatory Authority (EPRA).	EPRA has wide regulatory, monitoring, assessment, coordination, licensing, certification, inspection, audit investigative and enforcement functions touching on energy and petroleum in Kenya.
4.	Powers of the EPRA	The rights, duties, obligations, assets and liabilities of the ERC which subsisted prior to the Act coming into force will automatically be transferred to EPRA.	Some of the powers of the EPRA shall include the powers to: (a) issue, renew, modify, suspend or revoke licenses and permits for all undertakings and activities in the energy sector; (b) set, review and approve contracts, tariffs and charges for common user petroleum logistics facilities and petroleum products; (c) set, review and adjust electric power tariffs and tariff structures and investigate tariff charges, whether a specific application has been made for a tariff adjustment; (d) formulate, set, enforce and review environmental, health, safety and quality standards for the energy sector in coordination with other statutory authorities; (e) approve electric power purchase and network service contracts for all persons engaging in electric power undertakings; (f) investigate and determine complaints or disputes between parties over any matter relating to licenses and license conditions; (g) enter, inspect and search any premises where an offence is being committed or is suspected to have been committed; (h) issue orders or directions to ensure compliance with this Act; (i) impose such sanctions and fines not exceeding KES. 100,000/= per violation per day for a maximum of thirty (30) days; (j) enter, inspect and search any premises at which any undertaking relating to petroleum operations is carried out or an offence is being committed or is suspected to have been committed; (k) issue orders either requiring acts or things to be performed or done, prohibiting acts or things from being performed or done, and may prescribe periods or dates upon, within or before which such acts or things shall be performed or done or such conditions shall be fulfilled in furtherance of its powers under the law relating to petroleum; (l) Impose such sanctions and civil fines not exceeding KES. 500,000/= per violation per day to secure compliance with orders issued under the law relating to petroleum; and (m) take or remove, for analysis, testing or for use in evidence in connection with the commission of an offence relating to petroleum, samples of petroleum or other substances from any area where any upstream petroleum operations are being carried on.
5.	Energy and Petroleum Tribunal (the Tribunal)	Formerly the Energy Tribunal under the Repealed Act.	Members of the Tribunal The Tribunal shall consist of not more than seven (7) members including a chairperson who shall be appointed by the President from among persons qualified to be judges of the High Court and who has at least five years’ experience in energy and petroleum matters and six (6) other persons possessing knowledge and experience in law, petroleum and energy and who are not in the employment of the Government, Agency or the Authority.
6.	Jurisdiction of the Tribunal	Mostly similar provisions.	The Tribunal shall have jurisdiction to hear and determine all matters referred to it relating to the energy and petroleum sector (excluding trial of criminal offences) arising under the Act or any other Act.The Tribunal shall have original civil jurisdiction on any dispute between a licensee and a third party or between licensees.The Tribunal shall also have appellate jurisdiction over the decisions of the EPRA and any licensing authority and may refer any matter back to the Authority for re-consideration.The Tribunal shall have power to grant equitable reliefs including but not limited to injunctions, penalties, damages, specific performance.
7.	Power of Review and Appeals from the Tribunal	The provisions were largely like those contained in the Act.	The Tribunal may, on its own motion or upon application by an aggrieved party, review its judgments and orders.Any person aggrieved by a decision of the Tribunal may, within thirty (30) days from the date of the decision or order, appeal to the High Court.
8.	Rural Electrification and Renewable Energy Corporation	The Rural Electrification and Renewable Energy Corporation has taken over the functions of the Rural Electrification Authority.	The Corporation shall perform such functions and exercise such powers relating to the oversight and management of rural electrification programme.
9.	Nuclear Power and Energy Agency (the Agency)	The Repealed Act did not provide for the Agency, however, the same was provided for under the Kenya Nuclear Electricity Board Order, No. 131 of 2012.	The Act provides specific objects and functions of the Nuclear Power and Energy Agency (the Agency). It states that the Agency shall implement the country’s nuclear energy programme and carry out research, development activities in the energy and nuclear power sector.The Agency has the power to enter collaborative programmes with other countries, international and national organizations in relation to nuclear electricity research and development. It will be interesting to observe our country build its capacity in the nuclear energy sector.
10.	Vesting of Renewable Energy	The Repealed Act did not have elaborate provisions on the vesting of renewable energy.	All unexploited renewable energy resources under or in any land vests in the National Government subject to any rights which, by or under any written law, have been or are granted or recognized as being vested in any other person.This means that private persons who identify potential renewable energy resources will need to apply to the National Government.
11.	Establishment of Renewable Energy Resource Advisory Committee	The Repealed Act did not provide for a Renewable Energy Resource Advisory Committee.	The Renewable Energy Resource Advisory Committee shall advise the Cabinet Secretary on:(a) the criteria for allocation of renewable energy resource;(b) licensing of renewable energy resource areas;(c) management of water towers and catchment areas;(d) development of multi-purpose projects such as dams and (e) reservoirs for power generation, portable water, flood control and irrigation with a view to ensuring proper coordination at policy, regulatory, conservation and operational levels on matters relating to the various uses of water resources; (f) management and development of renewable energy resources.
12.	Geothermal Resources	The Repealed Act did not have elaborate provisions on Geothermal energy.	All un-extracted geothermal resources under or in any land shall vest in the National Government.The Cabinet Secretary may authorize any person in writing, to make surveys, investigations, tests and measurements in search of geothermal resources and for that purpose the authorized person upon receiving an application for the extraction of geothermal resources in respect of any land, the Cabinet Secretary and may grant a license for a period not exceeding thirty (30) years, over part or the whole of a geothermal.A license shall confer upon the licensee the right to enter upon the land, to extract geothermal resources, to take and use or apply the geothermal resources and to do all such things as are reasonably necessary for the conduct of those operations.The Act provides that any decision by the Cabinet Secretary to issue a licence shall be made upon advice of the Renewable Energy Resource Advisory Committee.
13.	Renewable Energy Feed-in Tariff System	The Repealed Act did not contain these provisions.	The Cabinet Secretary may upon recommendation of the EPRA, make regulations necessary for the administration and implementation of the feed-in-tariff systemThe main objectives of the Renewable Energy Feed in Tariff Systems are to:(a) catalyze the generation of electricity through renewable energy sources;(b) encourage local distributed generation thereby reducing demand on the network and technical losses associated with transmission and distribution of electricity over long distances;(c) encourage the uptake of, and stimulate innovation in renewable energy technology; and(d) Reduce greenhouse gas emissions by lessening reliance on non-renewable energy resources.
14.	Downstream Coal – Requirements of License for Coal	The Repealed Act did not contain these provisions.	Anyone who wishes to carry out the production of energy from coal will require a valid license or a permit.One can obtain a license or permit by applying to the EPRA who within thirty (30) days, may conditionally or unconditionally grant the license or permit, or refuse to grant the license or permit.
15.	Electrical Energy Licensing	The Repealed Act contains provisions on licensing electrical energy generation.	A person who wishes to carry out the generation, exportation, importation, transmission, distribution and retail supply of electricity must apply for a license to the EPRA in so far as the person shall not require any authorization to generate electrical energy for own use of a capacity not exceeding one (1) megawatt.When considering the application, the authority shall look at:(a) the impact of the undertaking on the social, cultural or recreational life of the community;(b) the need to protect the environment and to conserve the natural resources in accordance with the Environmental Management and Coordination Act;(c) land use or the location of the undertaking;(d) economic and financial benefits to the country or area of supply of the undertaking;(e) the economic and energy policies in place from time to time; (f) that the contractual rights, privileges, liabilities and obligations accrued to an existing licensee or any other person are not materially adversely affected; (g) the cost of the undertaking and financing arrangements; (h) the ability of the applicant to operate in a manner designed to protect the health and safety of its employees and users of the service for which the license is required and other members of the public who would be affected by the undertaking; (i) the technical and financial capacity of the applicant to render the service for which the license is required.
16.	Rights of Way, Wayleaves and Use of Land for Energy Resources and Infrastructure	The Repealed Act contains similar provisions to the Act.	A person may develop energy infrastructure, petroleum or gas pipelines, geothermal or coal infrastructure, on, through, over or under any public, community or private land.They must however seek prior consent to survey the land either from the owner of the land or the relevant person or government agency responsible for management of the land.
17.	Local Content Requirements	The Repealed Act did not provide these provisions.	Every person carrying out any undertaking or works under this Act shall comply with local content requirements in all its operations. Persons are required to prepare and submit an annual and long-term content plan which corresponds with the work program to the EPRA for approval.The local content plan submitted to the EPRA shall:(a) ensure that first consideration is given to services provided within the County and goods manufactured in the country where the goods meet the relevant specifications as prescribed by the Kenya Bureau of Standards or in absence of a Kenyan standard any other internationally acceptable standards;(b) The plan should also ensure that qualified and skilled Kenyans are given first consideration with respect to employment at all levels of the value chain; and(c) adequate provision is made to train Kenyans on the job.The local content plan shall include sub-plans on the following: employment and training; research and development; technology transfer; industrial attachment and apprenticeship; legal services; financial services; insurance services. consultancy services; construction services; hospitality services; transport services; security services; clearing and forwarding services; or inspection services.
18.	Compulsory Acquisition	The Repealed Act had a similar provision to the Act.	If the Cabinet Secretary is satisfied that the holder of a license under this Act reasonably requires land for purposes of energy infrastructure or for incidental purposes and has failed to acquire the land after making reasonable attempts to do so, the Cabinet Secretary may apply to the government agency responsible for the management of the subject land to acquire it compulsorily.

We are available to assist you to understand and comply with the provisions of the Energy Act, 2019.

If you have any queries regarding the Energy Act, 2019, please do not hesitate to contact James Wairoto at [email protected] or Bernard Musyoka [email protected]. Please note that this e-alert is meant for general information only and should not be relied upon without seeking specific subject matter legal advice.

July 13, 2019

Review of the Energy Act, 2019

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