The Kenya Association of Manufacturers (KAM) has proposed changes in electricity pricing following a hike in the cost of production for its members.
In its Manufacturing Priority Agenda (MPA) report for 2024, the employers noted that the cost of electricity had increased significantly within the last year.
According to the report, the cost of electricity had increased by approximately 58 per cent.
The association noted that the rate used to be Ksh15.8 per kWh in January 2021, however, that increased to Ksh25.1 per kWh in 2024.
Notably, it was noted that some of the members were spending close to Ksh1 billion on electricity bills, money they noted would otherwise be used to create more employment for Kenyans.
Consequently, the manufacturers have proposed to have the rate set at Ksh10 per kWh.
"If the proposed Ksh 10/kWh is adopted by the government, the electricity cost facing the manufacturer can be reduced to Ksh 0.56 billion (a 51% reduction in the cost of electricity).
"The company can then use the savings to expand the plant hence hiring more workers and increasing tax contributions or improving cashflow for the business," read the report in part.
On the other hand, they also noted that the government could focus more on the generation of green energy which would be cheaper.
In particular, they expressed that the increase in the generation of geothermal energy would be more cost-effective.
Additionally, the association wants the government to restructure the Time of Use (ToU) to incentivize industries to operate during off-peak hours such as night hours when the electricity demand is less.
"The government should fast-track regulations on power sales from generators directly to manufacturers and lift the existing moratorium on new power plants to open negotiations for new capacity power plants and restore investor confidence.
"The government should also regularise the establishment of the fuel price stabilization fund by establishing a management
structure," read the report in part.
