OVERPRICED

Energy CS questioned over high power bills

Sanate wants some taxes in electrify billing revised downwards

In Summary

•Kenyans paying up to seven different taxes on electricity bill.

•Energy CS Charles Keter however says all taxes are justified, adding any adjustments will affect electricity projects in the country.

A Kenya Power prepaid user loads her metre in Kangemi Estate, Nairobi/FILE
A Kenya Power prepaid user loads her metre in Kangemi Estate, Nairobi/FILE

Energy Cabinet Secretary Charles Keter was yesterday put to task over the surging electricity  bills with senators proposing a reduction in the number of taxes levied.

The Energy Committee chaired by Nyeri Senator Ephraim Maina said Kenyans are burdened by ever rising power bills and the numerous taxes and levies.

A standard electricity bill in Kenya has an average seven taxes, which accounts for almost half of the amount of electricity paid for.

 
 

They include the Fuel Energy Charge (FEC) related to fuel oil used by thermal plants operated by KenGen and Independent Power Producers, isolated Rural Electrification Programme (REP) levy and Foreign Exchange Rate Adjustment (FEAFRA).

Consumers are also pay for inflation adjustment, VAT, Energy and Petroleum Regulatory Authority (EPRA) levy and Water Resources Management Authority (WRMA) levy.

For example, a domestic user consuming less than 100 kilowatt-hour, this month, will pay Sh10 for a unit of power, Sh2.43 FEC, 0.6 forex adjustment, Sh0.32 inflation adjustment, 0.023 WRMA levy, Sh0.03 goes to EPRA, while REP will take five percent of revenue from unit sales.

VAT is currently at 14 per cent with the total unit cost coming to Sh15.75.

For a house in rural Kenya that consumes about 50 units a month, on lighting of about two-three hours a night, will spend an average Sh787.32 on electricity.

A purchase of Sh300 units made this week gave 19.05 kilowatts-hour, tokens valued at Sh190.56.

Sh109.44 went into taxes among the Sh35.54 as VAT, Sh46.29(Fuel Energy Charge), Sh11 (Forex Charge), Sh9.52 (Rural Electrification Programme) and Sh6.09 (Inflation).

 
 

“Kenyans including myself are complaining about electricity billing. Kenyans are suffering,” Maina said asking CS Keter to give an insight on the taxes and levies.

Nominated Senator Petronila Were proposed the reduction of the REP levy from five per cent to one per cent, until post-Covid-19 when the economy bounces back.

“How can we relieve the pain on Kenyans, reduce it (REP) to one per cent until the economy is back then we can take it back to five per cent,” she said.

Keter however defended all the taxes and levies saying they are justified.

“There is no intention of over billing.  Kenya Power is a listed company run above board,” Keter said.

On reduction of levies, mainly the REP, Keter said such a move would affect rural electricity projects.

“It can be one per cent, there is no problem, but it will slow down projects,” Keter said citing the funding of connections in off-grid areas.

The levy was introduced to support the electrification of rural and remote areas, a key element in driving the Last Mile Program which targets universal access to electricity by 2022.

Kenya Power has been under constant criticism form consumers who have continued to question the value for money spent electricity purchase.

Expensive Power Purchasing Agreements have been blamed for the high cost of electricity in the country, where consumers are paying even for un-utilized power as a result of overproduction.

The country has a generating capacity of over 2,800MW with a demand of about 1,926 MW, the highest, recorded in February this year before Covid-19 interrupted the economy.

In its financials for the year ended June 2019, Kenya Power blamed an increase in non-fuel power purchase costs as one of the main reasons for its 91.9 per cent drop in profit.

The costs went up by Sh18.1 billion to Sh70.9 billion, from Sh52.8 billion in a similar period in 2018, it said.

Revenues from electricity sales however grew by Sh16.9 billion to close at Sh112.4 billion, from Sh95.4 billion the previous year, a 17.8 per cent increase.

The rise in revenue is partly attributed to a tariff review at the beginning of the year prior to the subsequent tariff harmonisation that lowered rates for small commercial customers and broadened life-line tariff for domestic customers.