Electricity prices cut a step in right direction

The move by the government to finally gazette a 15 percent cut in electricity tariffs on Friday is a big relief for consumers and businesses hurting from the impact of the Covid-19 pandemic.

After a week of embarrassing sideshows from the critical players in the sector who almost sabotaged President Uhuru Kenyatta’s promise to reduce the cost of power, the Energy ministry on Friday followed through to ensure the new tariff is gazetted.

The cut will see low-income households who use less than 100 units save Sh3.3 per unit while ordinary consumers will save Sh3.2 per unit.

Small industrial users of less than 100 units got a Sh7.9 cut per unit while small industrial consumers of less than 15,000 units would save Sh3.2 on their monthly bills.

Large commercial users were handed a Sh2.5 cut per unit during peak hours and Sh1.25 during off-peak.

The reduction in power costs comes after the government struck out 16 percent VAT on demand charge, fuel and non-fuel costs. Though this is not enough, it will undoubtedly put more money in the pockets of Kenyans as well as improve Kenya’s competitiveness as a favourite investment destination in the region.

The next phase of the cuts will affect the Independent Power Producers (IPPs), who are prepared to put up some resistance.

Besides IPPs, the government may also be required to consider reviewing the layers of taxes and levies that consumers have to pay as they buy electricity.

It is, however, comforting to note that the Energy Ministry has renewed its commitment to Kenyans that it will ensure that the remaining 15 percent cut is effected in the first quarter as promised by the head of state.

The clock is ticking and all players will be required to make painful sacrifices, forego some income for the sake of the greater good of the economy.

Kenyans will expect the ministry to honour its Friday promise by the end of March.