Govt eager to lower power tariffs

July 28, 2011

, NAIROBI, Kenya, Jul 28 – The Energy and Finance Ministries are in discussions to develop a structure that will result in the waiver or reduction of some of the tax components in electricity bills.

Energy Assistant Minister Lagat Magarer explained that the government was concerned about the high cost of energy and the impact it was causing on Kenyans and wanted to come up with a mechanism that would relieve this burden.

“We have begun negotiating with our colleagues in the Ministry of Finance and part of what we are going to be doing is to agree on how these taxes may be levied or removed,” he told Parliament.

But while admitting that more needed to be done to ensure the supply of reliable and affordable power to all, Mr Magarer appealed for the lawmakers to support such motions when they are tabled before the Parliament.

He was responding to questions by Members of Parliament on what the government was doing to cushion Kenyans from the high energy bills although he did not expound on whether this mechanism would be extended to petroleum products.

The Assistant Minister in charge of electrification issues was hard pressed by Budalangi Member of Parliament Ababu Namwamba to explain why the government had billed the Rural Electrification Authority which is its own agency to pay accumulated Value Added Tax amounting to Sh1.8 billion.

Mr Namwamba demanded to know why the government could not do away with this tax which he argued would enable the Authority to deliver on the mandate of connecting more Kenyans in the rural areas to electricity.

He also wanted to know whether there were cartels among Independent Power Producers that were colluding to stop power production and leading to the current load shedding programs.

This was however an accusation that the assistant minister vehemently denied adding that the government does enjoy a cordial relationship with the producers.

And reinforcing the point that industries and the economy in general would be hurt by the ongoing power rationing program, Ikolomani MP Bonny Khalwale proposed that the government should open up the electricity distribution market to other players.

Such a move he argued, would end Kenya Power’s monopoly and enhance competition in the distribution services and thus translate into cheaper and reliable power.

Although he remained non-committal, Mr Magarer disclosed that this was an option they were seriously considering.

The government, he said, was committed to ensuring efficient and cost effective delivery of power to Kenyans and hence the reason it had embarked on various long term energy development projects.

Kisumu Town West MP, Shakeel Shabbir however opined that these projects needed to be fast tracked to ensure that the country achieves its development goals.

He feared that energy production was not growing in tandem with demand which was estimated to rise to 2029 Megawatts (MW) by 2013/2014.

More resources, he pointed out, were required to enable Kenya to harness its huge potential of green energy.

For instance, the capacity from geothermal energy alone is estimate to be 7000MW but the country has only managed to tap about 200MW.

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