NAIROBI, Kenya, Feb 8 – Manufacturers have voiced their concerns over planned electricity hike by Kenya Power, which they say will lead to higher cost of production.
The Kenya Association of Manufacturers (KAM) argues that the increment will see the cost of electricity rise by between Sh3.5 and Sh5, depending on tariff and consumption.
The utility company has proposed a new tariff for domestic consumers that will see power charges rise by between 13 to 20 per cent.
Consumers with a life-line consumption band of below 30 kilowatt-hours (kWh) per month will pay Sh20.5 per unit from the current Sh18.14, representing a 13 per cent jump.
Out of the Sh20.5, Sh14 is the consumption charge meaning Sh6.5 is on taxes and levies.
“Kenya has one of the highest electricity tariffs in the region, currently at average of $0.16 Per KWh compared to other African exporting countries such as South Africa, Egypt ($0.03), Morocco, Ethiopia ($0.05) and Tanzania ($0.08),” KAM Chairman Rajan Shah said.
“Tariff review that pushes up the cost of electricity will drive production cost even higher for local industries, rendering the manufacturing sector uncompetitive,” Shah added.
Over years, industrialists have raised concerns over the high cost of electricity, attributed to expensive Purchase Power Agreements (PPAs), high cost of fuel, multiple taxes and levies such as forex, VAT and fuel cost adjustment, among others.
“Kenya’s competitive positioning on the strength of electricity is being eroded year on year despite investments in renewable energy resources,” KAM said.
“It is impossible for the country to be competitive as an investment destination and therefore industrialize in the absence of affordable, reliable, quality, and sustainable electricity for the manufacturing industry,” it added.
KAM, in its part, says that the state should lower the power cost to below $0.10 per unit.
“The Association shall engage Energy and Petroleum Regulatory Authority (EPRA) on the above concerns as we advocate for the reduced cost of power, in line with our advocacy agenda towards sustainable and stable policies, which are key for driving manufacturing competitiveness.“
