Govt lowers energy costs for manufacturers

The government has made good its promise to lower electricity costs for manufactures but with a condition.

According to the ministry of energy manufacturers will from July pay 9 US cents per kilowatt hour of power (KWH) in a move aimed at growing the manufacturing sector.

This will be a massive reduction from the current 16 US cents paid by large power consumers as the private sector continues to push for an enabling environment to do business and boost global competitiveness.

However manufacturers will have to sign a performance agreement with the government before the same is passed.

Following the 8th Presidential Round round table meeting with President Uhuru Kenyatta, manufacturers will be expected to pass on the lower operating costs to consumers while at the same time ramping up production.

The government has set a target of increasing the share of the manufacturing sector to GDP at 15 percent by 2021.

The move comes as the Energy Regulatory Commission evaluates the current tariff regime, but pressure from private sector players could see the cost of power come down sooner.

On Tuesday, President Uhuru Kenyatta said energy costs have been a top concern for most Kenyans, with the government keen to get an effective electricity costing model.

“We are also in discussion with a view to cutting some of the taxes and levies on power bills or, and I don’t want to raise your hopes, removing them altogether,” he said during the commission of Coca Cola’s new Sh7bn hot fill line.

Power bills currently attract VAT of 16 percent with levies to the Water Management Authority and the Energy Regulatory Authority.

Energy cabinet secretary said the government has also taken a decision not to license any thermal power plant or renew the license of stations whose contracts are coming to an end in a more to sustain the low electricity tariffs.

To plug the gap that will be left by the thermal power producers, Mr Keter said 310 megawatts from the Lake Turkana Wind Power plant, 400 megawatts of hydro power from Ethiopia and 55 megawatts from Garissa solar plant will be put on the national grid.

“All that will displace the thermal power plant because there is no need to say we are giving you power at 9 US cents but that power does not last,” Mr Keter said.