- The shilling has been depreciating against major international currencies for the past year, dropping by 23 per cent against the US dollar.
- This means, for Sh300, low-power consumers will get 13 units of electricity up from just 10 in January.
Image: /FILE
The cost of power in Kenya is expected to drop by Sh3.44 on eased forex pressure after Kenya made significant payment of foreign currency exchange payments in January.
Sources told the Star that the actual forex adjustment on power bills will drop by half to Sh3.21/kWh compared Sh6.45/kWh reported in January.
The Energy and Petroleum Regulatory Authority (EPRA) is yet to announce the changes.
This is expected to see people at the bottom of the economic pyramid spending 0-30 kilowatts of power per month pay Sh23.60 per kilowatt from Sh27 in January.
The rate is however higher than Sh22.45 charged per unit in December.
This means, for Sh300, low-power consumers will get 13 units of electricity up from just 10 in January.
According to the data, consumers spending 30 to 100 units per month will from the end of the month now pay Sh29 per unit of power from Sh31.97 in January and Sh31.97 per unit in December.
This means, that for Sh1,000, the user gets 34.4 units of power from 31 units while big consumers who have been paying an average of Sh36.81 per unit of power will pay ShSh33.37 per unit.
The shilling has been depreciating against major international currencies for the past year, dropping by 23 per cent against the US dollar. The local currency traded 160.50 units against the greenback on Wednesday, the highest gain in a fortnight.
Last year, Kenya Power reported a net loss of Sh3.2 billion, a reversal of Sh3.3 billion profit reported in the previous financial year.
The utility firm cited higher finance costs caused by the depreciating shilling as the reason for the loss.
The 89 percent jump in financing costs to Sh24 billion from Sh12. 7 billion hurt its bottom line, despite a 12 per cent rise in operating profit to Sh19. 2 billion.
Although the actual Fuel Energy Cost (FEC) has increased to Sh3.56/kWh from Sh3.07/kWh due to an increase in thermal generation from 6.27 percent to 8.10 per, EPRA will discount the pricing using revenue earned via discounted end-user tariffs.
Thermal generation mostly relies on diesel whose prices are currently at a record high.
Although EPRA retained the cost of a litre of diesel at Sh196.47 in the latest review, the rate is still high compared to a year average of Sh167.90.
"We have allowed the recovery of revenue deficit arising from the extension of discounted end-user tariffs between January-March 2023 of Sh548 Million is the 2nd of 12 instalments.
This is expected to lower the total FEC to Sh4.14/kWh from Sh4.33/kWh.
Furthermore, the government has marginally slashed the Water Resources Management Authority (WRMA) levy to Sh0.0133/kWh from the current Sh0.0151kWh. Generation from hydropower plants decreased from 24.66 per cent to 22.80 per cent.
The power price hike has increased in the past 12 months, forcing big manufacturing companies to either turn to alternative workable power sources like solars or cut on staff to ease the cost of going business.
The Kenya Association of Manufacturers (KAM) has protested the high cost of power saying, it will roll back the gains made when the cost of power was cut by 15 percent in 2021, adding that it will make Kenya’s manufacturing sector uncompetitive.