Relief for Kenyan households as January power prices drop 23.4pc

Hydro is the cheapest source of power in Kenya, with the average hydro tariff going for $0.0533/unit followed by wind which has an average tariff of $0.0894 per unit.

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Local households are enjoying relief after electricity prices declined 23.4 percent in January compared to a corresponding month last year, on the back of strengthened local currency and lowered fuel prices.

New data from the Kenya National Bureau of Statistics (KNBS) shows that consumers on average paid Sh5,705.92 for 200 kilowatt-hour (kWh) of electricity in January, marking a dip from the average of Sh7,447 incurred in January last year.

This is a departure from an earlier trend in which power prices had surged amid concerns they were making the country uncompetitive in the battle for foreign investors.

During the year to January 2024, for instance, power prices in the country jumped 41.08 percent from an average of Sh5,278.44 for 200 kWh in January 2023 to Sh7,447 in a similar month last year.

The latest shift comes on the back of a strong Kenyan shilling, which has gone from record lows of Sh163 against the US dollar in January last year to an average of Sh129 last month, translating to lower purchase costs for consumers.

Kenya Power’s Power Purchase Agreements are denominated in foreign currency, mainly in the US dollar and euros, meaning that when the shilling weakens, power purchase costs skyrocket.

The heavy rainfall that pounded the country in the first half of last year and led to record-high hydropower production also aided in lowering prices as it led to a decline in the fuel energy component of the power bill.

Hydro is the cheapest source of power in Kenya, with the average hydro tariff going for $0.0533/unit followed by wind which has an average tariff of $0.0894 per unit.

The lower cost of power has been a major driver in a significant drop in inflation, coupled with reduced food prices, especially for staples such as maize.

According to Kenya National Bureau of Statistics (KNBS), inflation stood at 3.3 percent last month marking a sharp drop from an inflation rate of 6.9 during a similar month last year.

But amid the decline in power prices, the reliability of supply has risen to become a key issue courtesy of numerous nationwide outages that have rocked the country in recent months.

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