BUSINESS & FINANCE

Cost of Electricity to Shrink by 15pc

The Treasury has offered Kenya Power a Sh7.05 billion subsidy to allow the utility cut consumer electricity bills by a further 15 percent.

“To shield Kenya Power from the effects of low electricity prices in the implementation of this second phase, the company has been allocated Ksh7.05 billion in the proposed 2022/23 budget,” stated the National Treasury under the leadership of CS Ukur Yatani.

The Budget Committee of the National Assembly revealed the multibillion-shilling subsidy in a report to lawmakers after Independent Power Producers (IPPs) resisted the push to cut their tariffs and allow Kenya Power to lower consumer bills.

.Kenya Power in January cut retail tariffs by 15 percent, which was hinged on the firm lowering system losses, the share of electricity bought from generators such as KenGen that does not reach homes and businesses due to theft and leakages from an ageing network.

The State promised a similar cut in a plan based on the review of Power Purchase Agreements (PPAs) after a task force appointed by President Uhuru Kenyatta found that there was a huge disparity between the tariffs charged by main power producer KenGen and private power generators.

The parliamentary committee members noted the move will see the implementation of the second tranche, which was scheduled for April 2022 but stalled due to prolonged negotiations, take off immediately.

The subsidy will see the completion of the 33 per cent price reduction of the cost of a unit of electricity promised by President Uhuru Kenyatta, and enforced by the Presidential Taskforce.

President Uhuru Kenyatta, during the Jamhuri Day celebrations on December 12, 2021, directed that the cost of power be lowered. He further called for scrutiny of the PPAs after it emerged that the existence of middlemen pushed the costs high.

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