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Economy

Ministry rules out power bills increase on fuel VAT

Energy Principal Secretary Joseph Njoroge.
Energy Principal Secretary Joseph Njoroge. FILE PHOTO | NMG  

The energy ministry has ruled out rise in power bills following the September 1 implementation of a 16 per cent VAT on petroleum products despite a sizeable amount of thermal energy being injected into the national grid.

Energy Principal Secretary Joseph Njoroge said 310MW wind power being incorporated into the grid will offset VAT charge, leaving electricity bills largely unchanged.

“Because we will have the wind power into our grid, the amount of diesel used in the thermal power generators will be significantly reduced to the extent that consumers will not feel the 16 per cent VAT on petroleum products. We are confident of the strength of the wind around Lake Turkana where the turbines are located so its impact is quite guaranteed,” Mr Njoroge said last week.

He was responding to concerns from the Senate Committee on Energy over the impact of the new tax on fuel that has drawn criticism across the country for its expected impact on the cost of living.

The contribution of the diesel-fired thermal power plants to the total energy mix increased to 21 per cent up from 13 per cent in 2016.

The Lake Turkana wind power relief comes at a time when the government is seeking to shed off thermal power generators in a bid to make electricity cheaper following recommendations by an energy taskforce set up by the Ministry of energy to look into Kenya’s generation mix.

Final tests on the 400 KV line set to evacuate the wind power are ongoing after its challenging construction that saw the government suspend Spanish contractor, Spain’s Grupo Isolux Corsan, who went into financial distress delaying the line’s completion.

Once energised the 436 kilometre - Loyangalani-Suswa line will hook the wind power onto the grid, a move expected to boost Kenya’s renewal energy levels into the generation mix.

Mr Njoroge also emphasised that consumers will not have to worry about the Sh1 billion penalty that was to be loaded on monthly electricity bills as penalty should the power line completion have delayed beyond the September deadline.

Lake Turkana Wind Power, is the largest in Africa, with a capacity of 310 megawatts which is enough to power up to one million homes.

It is also the single largest generation source that will be incorporated into the grid once the lines which also have a 500 kilometre extension from Suswa to Nairobi are powered.

Geothermal accounted for 44 per cent of the total energy purchased or 4,451GWh in the period to June 2017 while hydro provided 3,341GWh equivalent to 33 per cent according to Kenya Power.

Thermal power plants contribution to the total energy mix increased to 21 per cent up from 13 per cent in 2016.

Another 50MW Solar Powered energy is set to be incorporated into the grid before the end of this year in a move set to relieve Kenya’s 14 per cent reliance on diesel powered power plants.

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