Firms want late night power discounts pegged on output

Manufacturers have asked the government to peg its proposed late night power discounts on the level of production to fully compensate firms for the additional labour, security and transport.

The Kenya Association of Manufacturers (KAM) says it welcomes the State’s off-peak power plan, but says the discount proposed must be adequate to cover additional resources required to sustain night time operations.

“There should be a sliding scale – the more power a manufacturer uses to produce goods during night time, the more discount they should get,” KAM chairman Pradeep Paunrana said.

This, Mr Paunrana said, would encourage producers to ramp up their output without necessarily accruing higher costs – critical for firms to scale.

The Energy Regulatory Commission (ERC) is already holding talks with Kenya Power to craft incentive scheme to encourage industrialists to shift their production from daytime to hours between 11pm and 5am.

READ: Kenya Power starts preparation for cheaper off-peak electricity tariff

The shift by manufacturers to night-time production is expected to ease demand pressure during peak hours which often force Kenya Power to switch on the more expensive diesel generators to stabilise the supply.

Ministry of Energy officials reckon that the country consumes less than half the peak power demand between midnight and 5am.

The peak time stretches from 9am and climaxes at between 6pm and 9pm when Kenyans return home from work switching on house lighting, cooking appliances and TVs.

Reached for comment, ERC director-general Joseph Ng’ang’a said that discussions were ongoing, adding that the discount offered to manufacturers ought not to eat into the margins of Kenya Power.

“No figure has been agreed but the deal should favour both parties,” said Mr Ng’ang’a.

But suspended Energy secretary Davis Chirchir had last August said that cheaper off-peak electricity tariffs would start in the first quarter of this year and that industrialists would enjoy a discount of 40 per cent between 11pm and 5am.

Shifting industrial production to night shift is one of several options the government is pursuing to lower the cost of production that will ultimately reduce the cost of consumer goods and make Kenyan products competitive in the international market.

Industrialists have in recent months become sensitive to input cost increases, fearing it would blunt their competitiveness in the regional and global markets where pricing is factor for market share growth.