Kenya Association of Manufacturers (KAM) welcomes the 15% reduction in power tariffs in the country, gazetted on 7th January 2022.
Manufacturers shall enjoy a cost reduction of between KES 2.67 – 3.64 per unit of electricity, depending on their respective tariff and consumption levels. The cost of power shall further reduce for industries that meet the Time of Use Tariff threshold, as gazetted.
This is a significant milestone towards realizing our long-standing efforts to reduce power costs, boost local manufacturing and consequently, investments in the sector. Manufacturers have, in the past, raised concerns over the high cost of electricity in the country, which impacts the overall cost of production. The Association applauds the government for taking action on this issue. The timing is especially apt as the economy is experiencing the impact of the COVID-19 pandemic, including rising costs, supply challenges and lower purchasing power.
The high cost of electricity has been attributed to various factors, including expensive Purchase Power Agreements (PPAs), high cost of fuel, multiple taxes and levies imposed on electricity bills, VAT and Fuel Cost Adjustment, as well as depressed demand growth and inefficiency in the system despite the increased power generation capacity, among others.
Achieving overall sustainable and stable policies on the cost, availability, and reliability of power is paramount to our economic growth. To fully gain from the benefits of this move, we must keep an eye on the urgent implementation of the second phase of the 15% reduction in power tariffs, as announced by H.E The President during last year’s Jamhuri Day celebrations. We support the government’s efforts to address the fuel cost component that is one of the key factors in energy costs, as well as, the expensive petro-thermal generation, whose cost is greatly affected by fluctuating global prices and exchange rates.
We remain committed to promoting the competitiveness of local industries. We will continue to engage the government and other stakeholders towards achieving overall sustainable and stable policies on the cost, availability, and reliability of power.