Manufacturers raise concern over planned power tariffs adjustment
Kenya Association of Manufacturers (KAM) has expressed concern over the proposed increase in electricity tariffs by Kenya Power and Lighting Company, which is set to take effect on April 1.
The proposed increase will result in a 38 percent rise in the cost of electricity for manufacturers, costing them between Sh3.5 and Sh5 more per unit. This will reverse the 15 per cent reduction in electricity costs that was achieved in 2021. “Tariff review that pushes up the cost of electricity will drive production cost even higher for local industries, rendering the manufacturing sector uncompetitive,” the Association chairman Rajah Shah said.
Kenya currently has some of the highest electricity tariffs in the region, averaging at $0.16 per KWh, compared to other African countries such as South Africa, Egypt ($0.03), Morocco, Ethiopia ($0.05), and Tanzania ($0.08).
The proposed increase in tariffs will make it even more difficult for local industries to remain competitive. The high cost of electricity in Kenya has been a long-standing issue for manufacturers, impacting their overall production costs.
The cost of electricity has been attributed to various factors, including expensive Purchase Power Agreements, high fuel costs, taxes and levies, and depressed demand growth, among others.