Kenyans will witness an uptick in the cost of electricity consumed every day, should the state proceed with the proposed tariff increment on electricity by April 1, 2023.
Should it be effected, the Kenya Association of Manufactures (KAM) worries that the cost would increase by Ksh.3.5 and Ksh.5 per unit, translating to a 38 percent cost uptick depending on respective tariff and consumption levels.
The proposal by Kenya Power and Lighting Company (KPLC) comes even as millions of Kenyans struggle to afford basic commodities like food due to the high inflation rate, currently at 9 percent.
According to KAM, Kenya has one of the highest tariffs in Africa, currently at Ksh.20 Per KWh on average.
This is compared to other African states exporting countries such as South Africa, Egypt (Ksh.3.7), Morocco, Ethiopia (Ksh.6.2) and Tanzania (Ksh.10).
“Tariff review that pushes up the cost of electricity will drive production cost even higher for local industries, rendering the manufacturing sector uncompetitive, “ said KAM in a statement.
KPLC’s proposal in anchored on various factors including expensive Purchase Power Agreements (PPAs), high cost of fuel; multiple taxes and levies imposed on electricity bills, forex, Value Added Tax (VAT) and Fuel Cost Adjustment – as well as depressed demand growth. This is despite the increased power generation capacity.
In a letter by KAM, the country’s competitive positioning on the strength of electricity is being eroded year on 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 wants the state to lower the energy cost to below Ksh.12.5 per unit, and make power stable and readily available to industrial users to promote competitiveness in manufacturing locally and regionally.
“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. “
Kenya last cut the cost of energy by 15 percent in 2021.