Features

Cost of electricity: Cheaper power a boon for economy

Monday, January 10th, 2022 20:30 | By
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Kenya Power staff working on a power line. PHOTO/Print

Two recent deals are expected to not only boost the social-economic growth by reducing the surging inflation but also go a long way to put more money in the pockets of Kenyans.

Planned reduction in the cost of electricity on the one hand and opening of a new offshore jetty in Mombasa on the other, will go down the annals of history as among prima-stimuli that will ease the cost of living this electioneering year.

Already, President Uhuru Kenyatta’s order on reduction of electricity cost has seen the Ministry of Energy actualise the first tranche of 15 per cent dip, upon gazettement.

Further, the ministry intends to effect the next 15 per cent tranche this quarter.

With the new plan, the cost of power will go down from Sh24 to Sh20 per kilowatt but will decline further by another 15 per cent to Sh16 by end of March when the second phase of the reduction will be implemented.

During his last Jamhuri Day Speech Uhuru said the government will cut the cost of electricity by 30 per cent even as he instituted radical changes at the power distributor Kenya Power.

While this move is expected to ease the cost of living, it will significantly reduce the cost of doing business in the country, which will have a direct knock on effect on the cost of living.

The country’s high cost of electricity has seen some companies move their businesses to other countries. 

This comes hot on the heels of yet another promise that the ongoing construction of the Sh40 billion offshore Kipevu Oil Terminal will ease the cost of fuel once complete in April this year.

The new jetty which will be able to load and offload mega-tankers carrying all categories of petroleum products including crude oil, white oils and LPG is supposed to enhance supply and ensure price stability of petroleum products by replacing the 50-year old onshore Kipevu Oil Terminal.

It will save the country in excess of Sh2 billion annually in demurrage costs incurred by oil shippers, which savings are expected to be passed on to consumers in the value chain, thereby contributing to a significant reduction in fuel prices.

Expectations are that these savings trickle down to all consumers and producers to cushion them from the increasing cost of living which has been made worse by the Covid-19 pandemic shocks.

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