Avellon Williams
KENYA- Kenya’s manufactured goods are increasingly losing competitiveness in the global market due to high production costs, especially electricity.
Electricity costs keep going up despite government promises to the contrary, increasing costs for manufacturers and consumers alike.
Due to this, Parliament must come up with a roadmap on how to reduce consumer burdens this week when discussing high-powerprices. Over the past few years, the issue has been discussed many times in the House, but nothing has been accomplished.
The high costs can be attributed to Kenya Power’s contracts with independent power producers (IPPs). Several of these contracts were found to be skewed in favor of the firms, with prices set far above the market average, and guaranteed payments regardless of whether power is sold.
As a result, some private firms continue to make enormous profits at the expense of electricity consumers. Despite the high cost of fuel used to generate electricity by independent power producers, compared to hydropower, it is absurd that they sell the power at three times the price KenGen sells to Kenya Power.
There is also concern over the fact that some private companies are paid more than others. Why is this the case? Clarification is needed.
In some cases, radical measures might be needed, such as cancelling some contracts, as pointed out by MPs. Kenyans continue to face huge power bills despite attempts to renegotiate the terms of the IPP contracts.
Energy and Petroleum Regulatory Authority has approved new Kenya Power tariffs that will take effect this month. As an example, the Lifeline Tariff threshold has been reduced from 50 units per month to 30 units, meaning consumption above this will result in higher prices. Significant increases have also been seen in other tariff bands.
