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Kenya's electricity cost fourth highest in Africa, study shows

The cost includes all components of the electricity bill such as the cost of power, distribution and taxes

In Summary
  • The analysis was done in March by analysts at Globalpetrolprices who analyse global petrol and energy prices.
  • At the time, the cost of electricity was $0.222(Sh24.65) per kilowatt (kWh) in Kenya compared to a global average of $0.136(Sh15.10) per kWh for households.
A customer in Loresho, Nairobi, keys in tokens in her meter box on April 25, 2018. /ENOS TECHE
A customer in Loresho, Nairobi, keys in tokens in her meter box on April 25, 2018. /ENOS TECHE

Kenya has the fourth highest cost of power for households in Africa, a new analysis shows.

The analysis by Globalpetrolprices who analyse global petrol and energy prices was done in March and published in September.

At the time, the cost of electricity was $0.222(Sh24.65) per kilowatt (kWh) in Kenya compared to a global average of $0.136(Sh15.10) per kWh for households.

The costs includes all components of the electricity bill such as the cost of power, distribution and taxes.

The firm did not attribute the Sh9.50 difference to anything.

Some of the charges loaded on power bills in Kenya include Value Added Tax at 16 per cent of the total bill, Fuel Energy Charge at Sh3.97, Forex Charge at Sh0.77 and Energy and Petroleum Regulatory Authority charge at Sh1.16.

Others include the Water Resource Management Authority Levy currently at Sh1.60, REP Charge which is five per cent of the cost of the units of power and Inflation Adjustment at Sh18.19.

For commercial users, the cost of electricity was $0.170 (Sh18.88) per kWh in Kenya compared to a global average of $0.124(Sh15.10) per kWh.

Currently, electricity consumers in Kenya are paying Sh26.57 per kWh.

The analysis cites Rwanda as having the most expensive electricity in Africa, at $0.259(Sh28.76) per kWh.

CapeVerde island came second with households paying $0.255(Sh28.32) per kWh, Mali came fourth at $0.232(Sh25.76) per kWh.

Globally, German households pay the most for electricity at $0.372(Sh41.33) per kWh.

In March, President Uhuru Kenyatta appointed a task force to review Power Purchase Agreements (PPAs)between Kenya Power and all electricity generators.

A review of the PPAs came after it emerged that Kenya Power has signed contracts committing it to take more electricity than it can sell, leaving it to pay heavy capacity charges to energy producers even when their plants are idle.

According to the latest review of the PPAs, electricity consumers in Kenya pay heavily for the weakening shilling.

The review showed that the country is paying Sh31 more per dollar for a deal entered when the US currency was trading at Sh72 in 2001.

According to the presidential task force the government bears the responsibility to make dollars or euros available, while the off-taker covers any exchange rate fluctuation risks as well as inflation, by passing the additional cost to the consumer.

The task force has recommended renegotiation of some of the power deals, suspension of expensive ones, and termination of ongoing negotiations.   

On Monday, Energy CS Monica Juma assured Kenyans that the cost of electricity will drop by 33 per cent before Christmas, as the government renegotiates power purchase deals.

The energy ministry is leading key reforms at Kenya Power and the country's energy sector at large, following recommendations by the presidential taskforce.

The government wants to bring down the cost of electricity by Sh8 per unit with a major focus being cutting purchase tariffs on contracts between Kenya Power and IPPs.

According to the President, cutting off expensive power producers will see a unit of electricity go for Sh16 from Sh24 which is two-thirds of the current tariff.

Consequently, a consumer spending Sh500 per month on electricity will pay Sh330, saving Sh170.