The cost of electricity increased in December, casting doubt on President Uhuru Kenyatta’s cheap power promise.
The cost of power last month alone went up by two per cent despite the President’s promise of a more than 30 per cent reduction that would be delivered in two tranches of 15 per cent each. The first reduction was to come into effect last month.
Data by the Kenya National Bureau of Statistics (KNBS) shows households experienced a two per cent spike in the cost of power compared to prices in November.
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In fact, the cost of power was 15.9 per cent more when compared to December 2020.
A household consuming 200 units of power (kilowatt-hours – kWh) paid Sh5,185 last month, two per cent more than Sh5,089 they paid in November and 11.2 per cent higher than Sh4,664 that they paid in December 2020 for the same amount of power.
Kenyans consuming 50 units a month paid Sh945 last month, 15.99 per cent up from Sh815 they paid in December 2020. Consumers utilising up to 100 units a month are bundled in what is termed as lifeline category with their units subsidised.
President Kenyatta’s latest promise of a 15 per cent reduction was pegged on recommendations by a task force he set up last March last year to look into contracts that electricity producers have with Kenya Power.
The task force on Power Purchase Agreements (PPAs), in a report handed to the President in September, recommended a 33 per cent drop in power costs by December.
A power consumers lobby now notes that the 33 per cent reduction in your power bill as announced by Uhuru could be a pipe dream unless there is a review of the taxes and levies, including scrapping some of them.
An electricity billing analyst from the Electricity Consumer Society of Kenya says the recommendation as contained in the Presidential Taskforce on Power Purchase Agreements cannot be achieved by just getting rid of Independent Power Producers (IPPs).
IPPs, according to the report, are a contributor to the high cost of power, selling electricity to Kenya Power at considerably high rates especially when compared to the rates charged by Kenya Electricity Generating Company (KenGen).
Consumer Society Executive Director Isaac Ndereva, during an interview at Spice FM, said the maximum reduction that can be achieved by ridding independent power producers is 12 per cent.
He insisted that 33 per cent is not tenable unless critical adjustments are made on the charges, one of them is to get rid of VAT which he insisted “has to go.”
“If they were just looking at the Power Purchase Agreements, and they say we do not want anybody else other than KenGen alone to supply power, the maximum they would have reduced is 12.81 per cent even if they reduce everything else and they do not touch VAT the maximum they would have reduced is Sh24,” he said.
President Kenyatta in his Jamhuri Day address on December 12, last year, announced that the cost of power will drop by 15 per cent by the end of 2021 with another 15 per cent expected by the end of first quarter of this year.
He said the drop in costs is meant to benefit Kenyans and entrepreneurs from ballooning power bills.
However, this 15 per cent drop that was expected by end of December has not been realised.
“The major component of this reduction is VAT and I do not think it is them (Kenya Power) to do that. VAT has to come from the President. Until they say 16 per cent VAT is off, even if we reduce to almost zero, it will not happen,” added Ndereva.