COST OF LIVING

Early Christmas gift for Kenyans as Uhuru slashes cost of power

Cost of electricity to reduce by a significant 15 per cent margin by December

In Summary

• A further 15 reduction in the cost of power will be realized in the first quarter of 2022, the President promised.

• The President urged power producers to demonstrate goodwill as the government seeks to make the energy sector “a greater catalyst of national development."

President Uhuru Kenyatta inspect a guard of honour during the 57th Jamhuri Day on December 12, 2021 held at Uhuru Gardens. Kenya became a Republic in 1964.
President Uhuru Kenyatta inspect a guard of honour during the 57th Jamhuri Day on December 12, 2021 held at Uhuru Gardens. Kenya became a Republic in 1964.
Image: FREDRICK OMONDI

Kenyans will see a significant drop in their electricity bills at the end of December, President Uhuru Kenyatta has assured.

The President, who was addressing the nation during Jamhuri Day celebrations at Uhuru Gardens in Nairobi, said there will be a 15 per cent reduction of the cost of electricity in the December bills.

“I am pleased to note that the pathway to reducing the cost of electricity by over 30 per cent is on course,” he announced.

On 20 October 2021, Uhuru directed the ministry of Energy to fasttrack the implementation of the recommendations of the Presidential Taskforce on Power Purchase Agreements.

“In honour of this pledge to the nation, and in response to the concerns over the high cost of electricity raised by both individual consumers and enterprises, I am pleased to announce to the nation that the reduction of the cost of electricity will be implemented in two tranches of 15 per cent each,” he stated.

The first 15 per cent, the Head of State said,  will achieved through initial actions focusing on system and commercial losses.

“In realising the second tranche of the reduction in power bills, I note that the ministry of Energy has initiated engagements with Independent Power Producers aimed at renegotiation of power purchase agreements; so as to give better value for money for consumers,” he said.

A further 15 reduction in the cost of power will be realized in the first quarter of 2022, the President promised.

Uhuru urged power producers to demonstrate goodwill as the government seeks to make the energy sector “a greater catalyst of national development.”

Uhuru had promised that the cost of electricity would progressively come down by 33 per cent, in the three-month period between October and December

The presidential task force investigated the reasons for the high costs of electricity and concluded that Kenya Power's involvement in expensive and uncompetitive power purchase deals with Independent Power Producers (IPPs) was the main cause.

The task force recommended a raft of measures to ensure the issue was rectified, including renegotiation of terms between the utility firm and IPPs, and changing of contracts that were unfavourable to the company.

The President received and ordered the ministry of Energy to secure the immediate implementation of all the recommendations "by Christmas Day, 2021".

According to Kenya Private Sector Alliance, the cost of electricity has risen by over 70 per cent in the last decade, a scenario that has eroded Kenya’s competitiveness.

Other reasons for the high cost of electricity include operational inefficiencies from Kenya Power, high transmission losses, inadequate grid infrastructure, high taxes and levies and reduced ease of doing business for generators among others.

Averagely, power is sold to Kenya Power at Sh9 per unit but is eventually billed to the domestic consumer at Sh25 per unit.

There are also inefficiencies and insufficiencies in power transmission that result in significant technical losses and underserved demand.

Currently, technical losses are estimated at 22.7 per cent against the global benchmark of 15 per cent.

These losses are already purchased electricity, which is still billed for in consumer tariffs.