Kenya Association of Manufacturers(KAM) stated that the proposed increased electricity tariffs by Kenya Power caused investors to shy away from the country leading to a reduction in its competitiveness in the manufacturing sector.
Speaking during a consultative meeting with Energy and Petroleum Regulatory Authority (EPRA) and Kenya Power representatives on Tuesday, February 21, KAM Chief Executive Officer Anthony Mwangi stated that Kenya had one of the highest electricity tariffs in Africa compared to other countries.
While citing South Africa, Egypt, Morocco, Ethiopia, and Tanzania as countries with cheaper power, Mwangi explained that the high cost of electricity in Kenya results in an increase in the cost of production.
Additionally, the CEO further linked the increase in the cost of production to an increased price of manufactured products.
“Our agenda is anchored on a business environment that guarantees competitiveness in energy pricing, a stable tax regime, and export-oriented manufacturing to grow manufacturing contribution.
“Kenya’s electricity tariff cost is already high compared to its competitors around the region. Any upward adjustment will be counterproductive to Agenda 2030,” Mwangi explained.
Moreover, Mwangi urged Kenya Power to develop electricity retail tariffs that were just and reasonable as compensation for investors for the risk assumed.
Addressing the matter of retaining profit margins, KAM advised Kenya Power to incentivize the use of electricity in the evenings to generate more revenue instead of increasing electricity prices.
"It is critical for Kenya Power to adopt other methods of increasing revenue through optimal use of current assets from under 40 per cent on average to 70 per cent.
"This can be done by incentivizing time of Use to off-peak hours," KAM Energy Consultant Sylvester Makaka added.
EPRA Director General Daniel Kiptoo assured the stakeholders that there were some interventions that would be executed to ensure milestones and reforms were followed through.
“This is not only an energy sector conversation but also an economic conversation,” Kiptoo indicated.
Kenya power issued the new tariff review proposal in January 2023, which would double the electricity charges for users consuming over 30 units monthly.
According to the utility, the move was aimed at generating more revenue as Kenya Power has been relying on increased sales.
