Kenya power bills to stay high

May 26, 2009
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, NAIROBI, Kenya, May 26 – Kenyans will continue to depend on emergency power and consequently pay high power bills as the adverse weather conditions continue to take a toll on the country’s water levels.

Energy Minister Kiraitu Murungi said on Tuesday that plans to withdraw emergency power generation beginning June had been put on hold as the country has not received sufficient rains required for hydro-generation.

“We generate close to 150 Megawatts (MW) from very expensive high speed plants. We thought by June that the water levels would have improved and therefore we could retire at least 50MW and another 50MW in December. But now we have had to revise all that until we see how much rain the country will receive in the next season,” he said.

Emergency power generation is expensive as it relies on diesel fuel and the cost is passed on to electricity consumers.

Currently, the country has an installed total emergency capacity of 146 MW, meant to assist in meeting the rising power demand estimated at eight percent per annum.

In February, the Kenya Power and Lighting Company had announced that it would retire some of its emergency power plants in order to ease the burden of high bills on consumers.

Mr Murungi however said the ministry would continue to hold discussions with their Treasury counterparts to work out ways of ensuring electricity prices are maintained at affordable levels.

Last year’s move by the government to reduce the Value Added Tax on electricity from 16 percent to 12 percent has not had the intended impact of significantly bringing down the cost of electricity.

Asked whether the Rural Electrification Levy which is a component in computation of the power bill would be abolished, Mr Murungi said it was still important and that the government need it to extend power connection to the million of Kenyans still in the dark.

“Only about 15 percent of Kenyans are connected to electricity and therefore we have a duty to connect the remaining 85 percent,” the minister said.

He further disclosed that Sh1.5 billion which was collected from the levy last year would be used for this purpose this year. The government plans to link one million consumers to electricity by 2012, which will increase connectivity to about 20 percent of the population.

At the same time, Mr Murungi said the government had set up with a committee to facilitate private sector investments in the energy sector.

Through the team which has representatives from both the private and public sectors, Mr Murungi said they hope to mobilise resources to be invested in the sector.

“We want to bring together the entire business community to focus on investment in the sector. We will do everything to facilitate them to put their money in the industry,” he vowed.

Mr Murungi spoke when he hosted the Spanish Ambassador Nicholas Martin Cinto where he disclosed that the two governments were negotiating for further cooperation in renewable energy generation.

A total of Sh3 billion has been extended by the Spanish government to Kenya since 1998 and the amount has largely been spent on rural electrification projects.

IberAfrica, a Spanish investor was among the first Independent Power Producers to invest in power generation in the country. Already, it has an installed capacity of 56.4MW and another 52.5MW is about to be commissioned.

Pointing that a total of $1billion is required in the next five years in power generation and transmission, Mr Murungi appealed for more concessional credit facilities from development partners.

“The government can’t mobilise such huge resources in a timely manner and we expect the private sector to play a big role especially in power generation. More investors are welcome to put their money in the sector,” he appealed.

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