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Economy

Factories say power bills to increase 18pc

The Kenya Association Manufacturers (KAM) said
The Kenya Association Manufacturers (KAM) said its calculation factors in other charges such as fuel cost, value added tax (VAT), forex charge and inflation. FILE PHOTO | NMG 

Manufacturers have raised reservations about the new power billing structure hours after it took effect, saying it is raising overall cost of electricity for businesses by 18 per cent, further hurting the competitiveness of Kenyan products.

The Kenya Association Manufacturers (KAM) said its calculation factors in other charges such as fuel cost, value added tax (VAT), forex charge and inflation.

The power cost is even higher by 36 per cent under the new regime announced by the Energy Regulatory Commission (ERC) on Monday when other charges are excluded, new KAM chairman Sachen Gudka said.

“ERC has actually raised the base cost of energy for business by 36 per cent and the overall cost by about 18 per cent after taking into account forex adjustments and so on,” Mr Gudka said on the sidelines of the five-day Kenya Trade Week which ends Friday.

The industrialists are concerned higher power bills will pile more pressure on the “high cost” of production in the country, which they say is about 12 per cent above the global benchmark.

About 800,000 new decent jobs are expected to be generated in the struggling manufacturing sector in four years to 2022 under the ambitious Big Four Agenda.

This is 500,000 more than the 300,300 jobs recorded last year, according to official statistics in the Economic Survey 2018.

The plan, under the manufacturing pillar, is to create an additional 1,000 small and medium-sized (SMEs) factories in targeted sub-sectors such as agro-processing, leather, textiles and fish-processing.

The targeted sub-sectors will be facilitated in accessing affordable capital through the proposed merger of State development financiers — Kenya Industrial Estates, Development Bank of Kenya, Industrial Development Bank of Kenya.

They are also to be helped in accessing new exports markets and expanding the existing ones through the Integrated National Exports Development and Promotion Strategy— unveiled on Tuesday— whose implementation will cost an estimated Sh800 billion in five years.

“We are actually moving in the wrong direction. Different arms of government are doing different things,” Mr Gudka said. “What we are calling for is an overarching body, an investment council for example chaired by the President, to take executive decisions on what should be right for the country and what will help our exports competitiveness.”

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