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Economy

Only 14 production firms running at top efficiency

A Kenya Power technician inspects a line. file photo | nmg
A Kenya Power technician inspects a line. file photo | nmg 

Only 14 manufacturers in Kenya are operating at maximum efficiency levels, new data indicates, as the State offers subsidy to encourage production and job creation.

Data from the Kenya Association of Manufacturers (KAM) indicates that the firms have put 100 per cent of their day and night capacity to work, leaving no headroom to increase output or hire more workers.

The data shows 64 per cent of the efficient firms (nine) are based at the Coast region while the remaining five are spread out in Nairobi, Athi River and Thika.

The list of efficient firms includes Brookside Dairy (Ruiru), ARM Cement #ticker:ARM (Athi River and Kaloleni factories), Bamburi #ticker:BAMB, Mabati Rolling Mills (Mariakani) and Tononoka Rolling Mills.

Others are Orbit Chemicals, Corrugated Sheets Ltd (Mazeras), Nzuri Sweets (Mombasa), Coastal Bottlers, Milly Fruits and Kitchen King.

The KAM, which represents manufacturers, shared the list with electricity distributor Kenya Power #ticker:KPLC following the government’s introduction of discounted night-time tariffs for large commercial customers from December 1.

In the night-time tariffs, large businesses and manufacturers enjoy half market rates from 10pm to 6am when electricity consumption is low.

But companies that operate at 100 per cent capacity daily, with no room to increase operations and lift their power intake enjoy only a five per cent discount instead of the 50 per cent.

This is because to be eligible for the cut tariffs, firms have to exceed their normal power consumption, a government’s goal to encourage activity and rev up the productive use of electricity.

If a firm, for instance, has been consuming 1,000-kilowatt hours (kWh) per day, it has to exceed the 1,000 units, with the additional units attracting the 50 per cent discount.

In the arrangement, commercial users who are metered at between 450 volts and 11 kilovolts (kV) pay Sh4.60 per unit, down from Sh9.20, a 50 per cent discount.

Consumers metered at above 11 kV pay an energy charge of Sh4 per unit, from Sh8, while the rate for those consuming above 33 kV has been halved to Sh3.75.

The conditions are aimed at ensuring Kenya Power’s revenues are not hurt.

Kenya Power records indicate that only 707 large companies are enjoying the discounted night-time tariffs. The night tariff had been introduced in 1999/2000 but squeezed Kenya Power’s margins since all large consumers shifted to the off-peak times with the electricity distributor incurring heavy losses. It abandoned the model.

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