By Aziza Atieno
The Kenyan Ministry of Energy announced the implementation of the 15% reduction in the electricity tariffs across the country as announced by President Uhuru Kenyatta in his speech marking the country’s 57th Jamhuri day.
This is a move aimed at lowering systemic and commercial losses that will boost livelihoods and economic growth by reducing the cost of living, putting more money in Kenyans’ pockets and reducing the cost of doing business.
It was established that electricity consumers in Kenya are paying heavily for electricity due to the shilling weakening against the US dollar. Kenya Power and Lighting Company, (KPLC), the company which transmits, distributes and retails electricity to customers throughout the country had signed contracts committing it to take more electricity than it can sell, leaving it to pay heavy capacity charges to energy producers even when their plants are idle, according to a review done by the Power Purchase Agreements(PPA).
Despite the reduction in power costs, an analysis by Global Petrol Prices who analyze global petrol and energy prices ranks Kenya as the fourth highest cost of power for households in Africa.
At the time, the cost of electricity was $0.222(shs. 24.65) per kilowatt (kWh) in Kenya compared to a global average of $0.136(shs.15.10) per kWh for households and $0.170 (shs.18.88) per kWh for commercial use. The analysis cites Rwanda as having the most expensive electricity in Africa, at $0.259(shs. 28.76) per kWh. Globally, German households pay the most for electricity at $0.372(shs. 41.33) per kWh.
The costs include all components of the electricity bill such as the cost of power, distribution and taxes. Some of the charges loaded on power bills in Kenya include Value Added Tax at 16 per cent of the total bill, Fuel Energy Charge, Forex charge and Energy and Petroleum Regulatory Authority charge.
“The reduction of the cost of electricity will be implemented in two tranches of 15 per cent each; with the first 15 per cent, which will be achieved through initial actions focusing on system and commercial losses being reflected in the December bills, and a further 15 per cent reduction in the first quarter of 2022,” a press statement from the Ministry of Energy says.
According to the President, cutting off expensive power producers will see a unit of electricity go for shs.16 (about USD 0.14) from shs. 24 (about USD 0.21) which is two-thirds of the current tariff.