By JOSHUA MASINDE
In Summary
- In February, the company made a proposal to the Energy Regulatory Commission seeking to increase power tariffs by more than 50pc
Kenya Power’s intention to increase electricity
tariffs hit a dead end on Thursday following the government’s rejection
of the proposal.
Deputy President William Ruto told a meeting of
Ministry of Energy, Kenya Power, the ERC and Ministry of Finance
officials the government would not allow any tariff increases, saying
the power distributor should find other means of raising revenue.
“Kenya Power has to sort out any inefficiency in
its operations. The Government will not accept any proposal to increase
power tariffs… It is a burden to the country,” Mr Ruto said in his
office.
In February, Kenya Power made a proposal to the
Energy Regulatory Commission seeking to increase power tariffs by more
than 50 per cent to raise funds to finance the expansion of the
distribution network and upgrade the current power lines to reduce
blackouts.
The directive leaves the question of power outages
unaddressed as Kenya Power had indicated that part of the money would
go to stabilising the system.
“We cannot subsidise for power forever. Tariff
reviews cannot just be upwards. Let us review it downwards,” he told the
officials.
Cost of goods
Manufacturing, which utilises about 60 per cent of
the energy in the country, protested the KP move, saying it would make
the sector uncompetitive and cause a rise in the cost of goods.
“The industry consumes 60 per cent of the power in
Kenya and therefore the increase will disproportionately negatively
affect industry and consumers of industrial products will bear the brunt
of the resultant increase,” Kenya Association of Manufacturers chief
executive officer Betty Maina had said, condemning the KP’s proposal.
The last time electricity energy tariffs were increased was in 2008. This negatively affected the industry, according to KAM.
The manufacturing lobby said the increase was
granted because Kenya Power then wanted to embark on new projects to
enhance system efficiency and avoid outage and reduce system losses to
no more than 15 per cent.
“The promises of 2008 have not been fulfilled and
they are projecting a gloomier picture of an even higher system loss,”
the lobby group said.
The country’s energy demand is also rising rapidly
with little generation to feed into the growing need due to increasing
urbanisation, industrialisation and the on-going rural electrification
programme.
At present, the country has only 1,533 megawatts
installed electricity capacity, up from 828 MW in 2003. In his address
to the 11th Parliament, President Uhuru Kenyatta said one of his
priorities would be to liberalise the energy sector and open it up to
new sources of investment.
This will help in expanding generating capacity,
extending the transmission network, improving the consistency and
quality of supply and lowering the cost of energy.
Mr Kenyatta said other alternatives of energy,
namely, solar, wind and geothermal plants, as well as oil, gas and coal,
would be explored to provide the country with stable power supply.
The President’s proposals were echoed by University of Nairobi economics lecturer Samuel Nyandemo.
“Our energy producers should explore better means
and more avenues for generating power cheaply other than moving to raise
tariffs,” Dr Nyandemo speaking to Nation by telephone said, such as geothermal, biogas and animal waste.
“You have to work out a plan for enhancing an efficient, cheap
and effective power supply to Kenyans. This must be done urgently,” Mr
Ruto told the officials, who included Energy permanent secretary Patrick
Nyoike, ERC director general Kaburu Mwirichia, Kenya Power managing
director Joseph Njoroge, Investment secretary Esther Koimett and the
Treasury’s senior economic adviser, Mr Kamau Thuge.
The Deputy President said high power tariffs were
an impediment to development and had forced some investors to move
their operations in neighbouring countries with cheaper power.
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