- In January 2023, EPRA raised the inflation adjustment cost to 85 cents per unit from 67 cents per unit, an adjustment that will be in place until the end of June.
- EPRA already increased the cost of power for ordinary domestic users in June to Sh28 kWh up from Sh26 kWh in May.
The national government is investing in alternative sources of energy to reduce the cost of power to encourage manufacturing in the country.
Industry Principal Secretary Juma Mukhwana said that the government was already working on a proposal together with the Energy and Petroleum Regulatory Authority to reduce the cost of power for manufacturers to Sh10 per kilowatt hour.
The price of electricity currently stands above Sh26.87 kWh for both households and businesses.
In January 2023, EPRA raised the inflation adjustment cost to 85 cents per unit from 67 cents per unit, an adjustment that will be in place until the end of June.
This was after the Kenya National Bureau of Statistics announced an inflation rate of 9.0 per cent in January. The rate projected that electricity prices would rise by 78 per cent by April.
EPRA already increased the cost of power for ordinary domestic users in June to Sh28 kWh up from Sh26 kWh in May.
“As a government, we are already working on a mechanism to lower the cost of power, especially for our manufacturers. EPRA is already working on and has tabled our proposal that we reduce the cost of power for manufacturing to Sh10 kWh down from what it is today at above Sh20 kWh,” Mukhwana said.
The PS was in Mombasa for a tour of the Milly Glass Works Limited in Liwatoni and Associated Vehicles Assemblers Kenya in Miritini last weekend.
He said Kenya as a country is not as well-endowed as other East African countries on power because looking at Uganda, for example, with Lake Victoria and the Nile, they can produce a lot cheaper electricity.
Tanzania, he said, because of natural gas, are also able to produce electricity at a lower cost.
“Unlike in Kenya, we are disadvantaged because almost 25 per cent of Kenya is arable and the rest is arid and semi-arid,” he said.
Mukhwana said that the government had invested a lot in wind energy at Loyangalani in Turkana and also in Ngong.
The government pumped Sh80 billion worth of investment in the embattled Lake Turkana Wind Power project in Loiyangalani expected to generate clean renewable and low-cost wind energy for distribution to the Kenya Power and Lighting Company.
He said that the government had plans to start similar projects in Lamu and Tana River counties.
“Our electricity has been very expensive, what we have done as a government is that we started in Naivasha where we are using geothermal energy,” Mukhwana said.
The government in March announced that all investors domiciled in the 15 special economic zones (SEZs) across the country will start paying special power tariffs of Sh10 per kWh as EPRA moved in to harmonise rates and entice more firms to set up in the SEZs.
Investors at Kedong SEZ in Naivasha are already enjoying an Sh5 per unit tariff.
“We are doing a lot and we will continue with more discussion for industries located outside the export promotion zones to be included.”
He added that the government was also encouraging the bringing in of natural gas from Tanzania, saying this will help bring down costs and can be used for manufacturing, especially in the Dongo Kundu SEZ where Taifa Gas is already setting up its systems.
On the issue of increased VAT on fuel from eight per cent to 16 per cent as passed in the Finance Bill, 2023, Mukhwana said that this was occasioned by the removal of subsidies.
He said that when the VAT was at eight per cent, Kenyans were still subsidising oil marketers for the remaining eight per cent.
“The government is already taking up measures to ensure we lower the cost of fuel. Through the government-to-government agreement with the UAE, Qatar and Saudi Arabia, we are buying fuel in Kenya shillings as opposed to using dollars which made fuel more expensive,” he said.
Mukhwana alluded to the fact that the same government that has increased VAT on fuel also zero-rated VAT on cooking gas.
This, he said, is where most hustlers are adding that Kenya will start enjoying reduced prices of cooking gas from July.
“This is where the hustlers are, you may not have a vehicle but at least you need to cook. If we remove VAT on cooking gas then every Kenyan household will benefit.
“So, we have to give and take because as a government we also have to be able to get money to do development, we can’t just remove everything,” he said.