Kenya: Electricity costs are still high despite the Kenyatta promise

A promise made by President Uhuru Kenyatta that electricity costs would gradually decrease by 33 percent in the three months between October and December was not kept. Instead, electricity now costs slightly more.

A study by the nation shows that electricity costs rose in October and November compared to the previous months, on the contrary, as Kenyans continued to pay for the failure of the ailing monopoly Kenya Power.

Nation can confirm that electricity costs for domestic prepaid customers (who pay with tokens) increased by at least 3.33 percent between the beginning of October and December 3, compared to the average charges between August and September.

Read: The government’s goal of cheaper electricity does not fit with its measures

Electricity charges between August and September – before the president placed the order – ranged from Sh17.85 to Sh17.86 per unit (prepaid with Kenya Power Paybill), rising between Sh18.4 and Sh18.5 between October and December.

Domestic customers

While the average cost of electricity for domestic customers was Sh17,855 per unit between August and September and rose to Sh18.45 between October and early December, Nation determined by reviewing electricity payments during the period.

The same has been observed by large commercial consumers who also say their electricity bills have not been reduced.

“So far, we’ve seen the restructuring and reforms in energy government agencies like Kenya Power and Kenya Electricity Transmission Company (Ketraco), as well as steps to renegotiate power purchase agreements (PPAs) that have made electricity expensive,” said Phyllis Wakiaga, executive director of the Kenya Association of Manufacturers (KAM).

Ms. Wakiaga told Nation that manufacturers had not seen any changes in costs, and KAM’s efforts to raise electricity tariffs for the sector from Sh11 per kilowatt to allow Kenyan manufacturers to compete in the region are ongoing.

Nation also saw electricity payment records from a manufacturer for September and October where there were normal minor changes but bills over Sh600,000 each month.

“We haven’t seen any cost reductions so far, but we believe the activity we’ve seen lately is geared towards making that happen,” she said.

High costs

Following an investigation by the President’s Task Force into the reasons for the high electricity costs, Kenya Power’s involvement in expensive and uncompetitive electricity purchase agreements with independent electricity producers (IPPs) was identified as the main cause.

The task force recommended a number of measures to correct the problem, including renegotiating terms between the utility and the IPPs and amending contracts in a way that would be unfavorable for the company.

When the President received the report on September 29, he instructed the Department of Energy to ensure the immediate implementation of all recommendations “by Christmas 2021”.

“The President has also examined and welcomed the recommendations of the task force, which show a way to reduce electricity costs by more than 33 percent within four months,” said a statement from the State House.

“Despite all efforts to streamline the company, electricity costs threaten the company’s financial sustainability and will continue to do so unless deliberate measures are taken to reduce costs and restructure PPAs,” said Kenyan leader Vivienne Yeda during the company’s general meeting on Friday.

Although Kenya Power’s board of directors and top management claimed they were on their way to restructure the company and cut costs, it was not clear when it would be done.