Manufacturers keep alert for the looming rise in electricity tariffs saying it could cripple industry

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By Rogers Aghan, February, 8, 2023, Concerns by The Kenya Association of Manufacturers (KAM) have been caused by the proposed electricity tariff increase by the Kenya Power and Lighting Company, slated for April 1, 2023.

It is anticipated that the increase in tariffs will raise the costs of electricity by 38 percent, with an increase of Ksh3 to Ksh5 per unit, based on the consumption levels and respective tariffs.

This emerges as an upset after a reduction of power costs by 15 percent was done in 2021.

According to The Kenya Association of Manufacturers (KAM), Kenya has recorded one of the loftiest electricity tariffs in the east and central African region with an average of $0.1 per kWh compared to exporting countries like Egypt, South Africa, Ethiopia, and Tanzania.

An increase in tariff could further affect the cost of production thus making the market more competitive for local industries.

Manufacturers have presented their discomfort concerning these rates for a long while now, citing various aspects like expensive Purchase Power Agreements (PPAs), multiple taxes, high fuel costs and levies imposed on forex, VAT, electricity bills, Fuel Cost Adjustment, among others.

Even with investments in renewable energy resources, Kenya’s competitiveness regarding electricity continues to diminish gradually.

KAM’s chair, Nogunyi Gitau, reiterated that it was impossible for the country to remain competitive as an investment destination and hence could not industrialize in the absence of affordable, dependable, quality, and sustainable electricity.

The Association is calling for the government to cut down the cost of electricity to below $0. 10 per unit and render power stable and readily available to industrial users.

KAM will be involving the Energy and Petroleum Regulatory Authority (EPRA) concerning the complaints as they advocate for reduced costs following their agenda towards sustainable and stable policies, essential for fostering competitiveness in the manufacturing arena.

In the tariffs proposed, domestic users will pay Ksh14/kWh for up to 30/kWh with those exceeding the 30/kWh per month expected to pay Ksh21.8/kWh, a figure expected to drop to Ksh20.61 in July 2024.

Small businesses now paying Ksh10 per kWh for using 0 to 100 kilowatts will pay Ksh15.

Tags: #Electricity tariffs #KAM #manufacturing # Kenya #Africa

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