The Kenya Association of Manufacturers (KAM) has protested the proposed increment of electricity tariffs terming it as an erosion of gains made in positioning the country’s business competitiveness.
In a statement, the association noted that the proposal, scheduled to be implemented starting April 1, will see the manufacturers’ cost of electricity increase by between Sh3.5 and Sh5 per unit, translating to a rise of up to 38 percent.
“Kenya has one of the highest electricity tariffs in the region, currently at an average of $0.16 (Sh20) Per KWh compared to other African exporting countries such as South Africa, Egypt ($0.03), Morocco, Ethiopia ($0.05) and Tanzania ($0.08),” said KAM.
“Tariff review that pushes up the cost of electricity will drive production cost even higher for local industries, rendering the manufacturing sector uncompetitive.”
While calling for the government to lower the cost of power to below $0.10 (Sh12.5) per unit, KAM said the move will help make power stable and readily available to industrial users hence promoting competitiveness in local and regional manufacturing.
The country’s steady rise in power costs in recent months has been attributed to among other factors expensive Power Purchase Agreements, high fuel costs, multiple taxes and levies imposed on electricity bills as well as a wobbling shilling.
Last month, Kenya Power acting Managing Director Geoffrey Muli disclosed the new proposed tariffs in a quest that will see the state-owned utility bag an additional Sh31.4 billion.
The monopoly thereafter submitted the proposed tariff to the Energy and Petroleum Regulatory Authority (EPRA), setting the stage for the first upward review of retail power prices since 2018.
According to the power utility, 64 percent of the revenue collected is used to pay Independent Power Producers and the Kenya Electricity Generating Company for electricity supplies, two percent goes to Ketraco and one percent to REREC.
KAM has however vowed to petition the energy sector regulator to ventilate its concerns which it says are in line with its advocacy agenda towards sustainable and stable policies.
The proposed tariff comes at a time when a host of industrial and domestic consumers are increasingly leaning towards solar energy on account of high electricity bills and the unreliability of the national grid.
Kenya Power asserts that the proposed increment is justified because the current electricity prices lapsed in 2019.
