Electricity prices still high as government move to increase connectivity
The connectivity of the last mile project has connected many households to power as the share of renewable energy by the government increases.
According to the latest Economic Survey from the Kenya National Bureau of Statistics (KNBS), in 2021, Kenya’s total installed electricity generation capacity increased by 5.4 per cent to 2,990 MW.
The total effective capacity rose by 5.6 per cent to 2,858 MW in the same period.
Recently, the government is aiming at connecting over 35,000 households to electricity and 1,200 facilities in 36 counties by December.
Energy Cabinet Secretary Monica Juma said the government was committed to achieving universal access to electricity to meet Kenya’s development goals.
The CS spoke in Bilbil town on Saturday when she officially commissioned the Bura-Bilbil-Charidende line.
The electricity line is part of the electrification of the public facilities project, currently being implemented in Western, Nyanza, North and South Rift, Central, Eastern, and Coast regions.
The projects are being implemented by the Rural Electrification and Renewable Energy Corporation.
“We are all cognisant of the fact that Kenyan households and businesses will need competitively-priced, reliable, safe, and sustainable energy to deliver on the Big Four Agenda priorities and ultimately the aspirations of Kenya’s Vision 2030,” she said.
However, the cost of electricity is still high despite the reduction in power costs.
Electricity consumers in the country are paying heavily for electricity due to the shilling weakening against the US dollar.
Power prices had been on the rise last year due to high fuel prices which forced the energy regulator to raise the FCC hitting households and energy-intensive firms hard.
In December last year, Epra raised the component to Sh4.63 per kilowatt-hour (kWh), the highest since June 2018 when it reached Sh4.75.
However, the energy regulator in January published new power tariffs that cut the consumption charge element of electricity by 15 per cent following the intervention of President Uhuru Kenyatta.
The power utility had signed contracts committing it to take more electricity than it can sell, leaving it to pay heavy capacity charges to energy producers even when their plants are idle, according to a review done by the Power Purchase Agreements (PPA).
An analysis by Global Petrol Prices analyse global petrol and energy prices ranks Kenya as the fourth highest cost of power for households in Africa.
Some of the charges loaded on power bills in Kenya include Value Added Tax at 16 per cent of the total bill, Fuel Energy Charge, Forex charge, and Energy and Petroleum Regulatory Authority charge.
The Energy ministry proposes to halve VAT on electricity in cost reforms aimed at lowering the cost burden.
Despite the fuel component being the single second largest component of the electricity bill, Kenyans consumed just six per cent of thermal power in 2020, making it by far the most expensive power source.
“A reduction in energy costs will require a multi-pronged intervention focused on each of the cost drivers but a reduction in base tariffs and FCC represents the biggest opportunity for effecting change,” it said.
