Kenya Power employees work on electricity connections. The cost of power is expected to go up as the 16 pc VAT levy is effected this month. Photo/File
What you need to know:
The higher VAT will add to the fuel, foreign exchange and inflation charges already borne by consumers.
In addition, a water levy for settling a debt owed to the Water Resource Management Authority (WRMA) by the Kenya Electricity Generating Company (KenGen) will be added as soon as a court dispute is resolved.
The cost of electricity will go up starting this month following the increase in Value Added Tax (VAT).
The higher VAT will add to the fuel, foreign exchange and inflation charges already borne by consumers.
In addition, a water levy for settling a debt owed to the Water Resource Management Authority (WRMA) by the Kenya Electricity Generating Company (KenGen) will be added as soon as a court dispute is resolved.
The debt stood at Sh630 million as at July this year. The levy would be in force for three years.
“Cofek went to court so we cannot effect the charges until the matter is cleared first,” said Energy Regulatory Commission economic regulation acting director John Mutua on Thursday.
However, he said, the impact on bills “will be very minimal, less than Sh0.02.” This would bring to seven cents per unit the levy charged on water consumers.
Following the coming to effect of the VAT Act 2013 on Monday, VAT charged on electricity has increased from 12 per cent to 16 per cent.
Consumers using less than 200 units of power who were previously not subject to VAT have also been brought under the net.
Harder times lie ahead for Kenya Power customers as the meteorological report for October to December released last week forecasts depressed rainfall.
This is likely to cause an increase in the price of electricity as water levels at the main dams drop, raising the proportion of the more expensive thermal power in the grid.
Increased cost of power will have a negative effect on inflation as well as the cost of power production. Last month, inflation shot to 6.7 from the 6.02 recorded in July.
Kenya Power has announced it will start dismantling all illegal connections across the country, which have been subjecting the company to huge losses.
Acting anaging director Ben Chumo said theft of electricity interfered with the quality and stability of power supplied to genuine customers.
“Illegal power connections have contributed significantly to supply interruptions as they cause transformer overloads, especially in the evenings,” said Dr Chumo.
He said operations to stem the vice were turning violent, with company vehicles being damaged by those enjoying illegal connections.
“With the renewed effort to curb the vice, we intend to sustain the disconnection at a particular area before moving to the next,” says the company.
