The Kenya Association of Manufacturers has attributed high cost of power to the cost of fuel, multiple taxes and levies imposed on electricity bills.
In a statement KAM chairman Mucai Kunyiha, highlights the 15 per cent reduction in power tariffs in the country as gazetted on 7th January 2022 will allow manufacturers to enjoy a cost reduction of between Kenya shillings of 2.67 – 3.64 per unit of electricity.
“The high cost of electricity has been attributed to various factors, including expensive Purchase Power Agreements (PPAs), high cost of fuel, multiple taxes and levies imposed on electricity bills, VAT and Fuel Cost Adjustment, as well as depressed demand growth and inefficiency in the system despite the increased power generation capacity, among others,” he said.
The Association has further applauded the government for taking action on this issue as the economy is experiencing the impact of the COVID-19 pandemic, including rising costs, supply challenges and lower purchasing power.
“This is a significant milestone towards realizing our long-standing efforts to reduce power costs, boost local manufacturing and consequently, investments in the sector manufacturers have, in the past, raised concerns over the high cost of electricity in the country, which impacts the overall cost of production,” Kunyiha said.
He indicated that achieving an overall sustainable and stable policy on the cost, availability, and reliability of power is paramount to the economic growth.
“We must keep an eye on the urgent implementation of the second phase of the 15 per cent reduction in power tariffs, as announced by the President during last year’s Jamhuri Day celebrations. We support the government’s efforts to address the fuel cost component that is one of the key factors in energy costs, as well as, the expensive petro-thermal generation, whose cost is greatly affected by fluctuating global prices and exchange rates,” Kunyiha said.
Kunyiha assured to promote the competitiveness of local industries and continue to engage the government and other stakeholders towards achieving overall sustainable and stable policies on the cost, availability, and reliability of power.