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Kenya Has The Highest Electricity Tariffs In East Africa

BY Juma · February 10, 2023 10:02 am

KEY POINTS

Any tariff review that pushes up the cost of electricity will drive production costs even higher for local industries, rendering the manufacturing sector uncompetitive.

KEY TAKEAWAYS

KAM’s position, therefore, is that the government should lower the cost of power to below $0.10 per unit, and make power stable and readily available to industrial users to promote competitiveness in manufacturing locally and regionally

Kenya has one of the highest electricity tariffs in the East African region, currently at an 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).

Any tariff review that pushes up the cost of electricity will drive production costs even higher for local industries, rendering the manufacturing sector uncompetitive. But those behind the push to increase the cost of electricity seem aloof from this simple fact.

According to the Kenya Association of Manufacturers, the increment in electricity tariffs “shall see manufacturers’ cost of electricity increase by between 3.5 and 5 shillings per unit, translating to a 38 percent cost increase, depending on their respective tariff and consumption levels. This will roll back the gains made when the cost of power was reduced by 15 percent in 2021.”

Manufacturers have over time raised concerns over the high cost of electricity in the country, which impacts the overall cost of production.

The high cost has been attributed to various factors including expensive Purchase Power Agreements (PPAs); high cost of fuel; multiple taxes and levies imposed on electricity bills, forex, VAT, and Fuel Cost Adjustment; as well as depressed demand growth – despite the increased power generation capacity, among others.

Kenya’s competitive positioning on the strength of electricity is being eroded year after year despite investments in renewable energy resources. 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. 

KAM’s position, therefore, is that the government should lower the cost of power to below $0.10 per unit, and make power stable and readily available to industrial users to promote competitiveness in manufacturing locally and regionally. The burden of inefficiencies in transmission and distribution should not be borne by customers.

“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,” said KAM.

Related Content: Cost Of Electricity Per Unit In Kenya Compared To Other Countries

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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