Stakeholders in the electricity sector on Tuesday, July 18, listed the measures they believe would help Kenya lower the cost of electricity as Kenyans continue to deal with the high prices.
While appearing before the Parliamentary Committee on Tuesday, July 18, the stakeholders urged the government to give incentives to Independent Power Producers (IPPs).
Led by representatives from Orpower 4 Inc, Kipeto Energy Limited, Kenya Association of Manufacturers (KAM), Kenya Private Sector Alliance (KEPSA), and the Institute of Engineers of Kenya (IEK), the stakeholders explained that Kenya requires stable power to realise a 24-hour economy.
According to the Committee, the high cost was due to a number of factors and extra charges imposed by KRA and Independent Power Producers among others.
Government Repaying Debt Owed to IPPs
The stakeholders have called upon the government to ease the payment pressure on Kenyan Power which adds the cost to consumer bills.
MPs have also suggested that Kenya Power should buy the units in the local currency rather than the US dollar.
Repaying debt owed to the suppliers will ensure Kenya Power does not pass down the extra cost to consumers.
Eliminate Transmission System Losses
Stakeholders have suggested that the government should strengthen the grid and eliminate power transmission losses and explore ways to reduce the fuel cost for thermal plants.
Kenya Power Managing Director and CEO Joseph Siror in May 2023, announced that Ksh10 billion has been set aside to construct new substations and power lines in order to strengthen the electricity distribution network.
"To adequately support e-mobility and other sectors of the economy, we will sustain investments to strengthen the grid and enhance network stability and flexibility for quality and reliable service," he stated then.
The high cost of fuel used in thermal plants reflects on the consumers' bills.
Review taxes and levies on Electricity
MPs have also been told to push for a review of the taxes and levies that affect the cost of electricity making it expensive.
Some of the added taxes and levies on electricity include Energy Regulatory Commission (ERC), Rep levy, 16 per cent VAT, Fuel Cost Charge (FCC), consumption charge, Warma levy, inflation adjustment, and Foreign Exchange Rate Fluctuation Adjustment (FERFA)
Notably, FCC, FERFA, Inflation, and WARMA vary monthly and the cost components are published in the Kenya Gazette.
In January 2023, President William Ruto assured Kenyans that there will be no additional charges on electricity adding that this was to ensure those in the low-income bracket could access cheap power.
Extension of Power Purchase Agreements (PPAs)
To further lower the cost of electricity, the government has been advised to extend Power Purchase Agreements (PPAs) to reduce the pressure on Kenya Power.
In February 2023, President Ruto while chairing a Cabinet lifted a moratorium on Power Purchase Agreements to guarantee a consistent supply of electricity.
The cabinet also approved a new policy to reduce the cost when Kenya Power buys from IPPs. This was set to reduce the losses incurred by Kenya Power but it is yet to take effect.
"The new policy framework is a break from the currently negotiated procurements or feed-in tariffs (FITs)," Cabinet resolved.
Ensure efficiency in the supply process
The team further asked that Kenya Power address the operational efficiency across generation, transmission, and distribution lines. This will ensure the consumers will get value for their money.
In March 2023, the Energy and Petroleum Regulatory Authority (EPRA) announced an increase in prices adding that it was due to the cost of transmission and distribution at Kenya Power.
Transmission and distribution of power in the country are interrupted by the rampant vandalism of power lines as well as calamities.
According to Energy Principal Secretary Alex Wachira, at least 20 transformers are stolen weekly.
