The government has cut the budgetary allocation for connecting homes to subsidised power by Sh685 million in the year starting July.
Budget estimates tabled in Parliament show that the Treasury has allocated Sh100 million under the Connectivity Subsidy.
The government has cut the budgetary allocation for connecting homes to subsidised power by Sh685 million in the year starting July, signalling that homes will be required to pay more to secure the grid connection.
Budget estimates tabled in Parliament show that the Treasury has allocated Sh100 million under the Connectivity Subsidy, representing an 87 percent drop from Sh785 million allocated in the year ending next month.
The cut raises fears that consumers will pay more to be connected to the grid with the increased cost set to hurt the targeted numbers in President Uhuru Kenyatta’s last year in office.
The connectivity subsidy is meant to cut charges for connecting homes to the national grid under the Last Mile Connectivity.
The scheme has seen power consumers get connected at a subsidised rate of Sh15,000 depending on their proximity to power lines and transformers, down from Sh35,000.
Without the subsidy the average cost of connection would be Sh71,307.60, locking most low-income households from electricity connection.
The cuts come at a time the African Development Bank (AfDB) had warned that the scheme could be derailed due to the low budgetary allocations.
The cost of the scheme passed the earlier projection but the Treasury has failed to increase the allocation and complement donor funding.
AfDB— co-financiers of the scheme— in it its latest audit of the Last Mile Connectivity said that the Treasury should increase allocation or request for additional donor funds to ensure the success of the scheme.
“As the sum of contract price has exceeded the total estimated project cost, the Government of Kenya contribution has to be increased or supplementary finance has to be requested to avoid delay on payment to contractors,” said AfDB in its audit update.
Kenya Power had in 2019 put the subsidy on hold for several months due to budgeting constraints. The utility however received financing after it received Sh18.6 billion in credit and grant from a group of international financiers, paving the way for a return of the subsidy.
The Jubilee administration rolled the scheme in 2015 with the aim of connecting 70 percent of Kenya’s households to the power grid.
Kenya Power said in its annual report for the year ended December that 197,971 customers were connected, bringing the beneficiaries to 306,771.
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