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Cost of electricity to reduce by 15 per cent this month

BUSINESS
By Grace Ng'ang'a | Dec 12th 2021 | 3 min read
By Grace Ng'ang'a | December 12th 2021
BUSINESS

The first 15 per cent reduction in the cost of electricity will reflect in the December bills. [Courtesy]

President Uhuru Kenyatta has announced that the cost of electricity will reduce by 15 per cent by end of this month following successful renegotiations of power purchase deals.

The Head of State said the reduction in the cost of electricity will be implemented in two tranches of 15 per cent each.

Speaking during the 57th Jamhuri day celebrations at Uhuru Gardens, Nairobi, yesterday, Uhuru assured that the first 15 per cent reduction in the cost of electricity will  reflect in the December bills.

“In response to the concerns over the high cost of electricity raised by both individual consumers and enterprises, I am pleased to announce to the nation that the reduction of the cost of electricity will be implemented in two tranches of 15 per cent each,” he said.

The president further announced that the other 15 per cent will be effective by March next year.

“The other 15 per cent will be reduced in the first quarter of 2022. I urge the power producers to demonstrate goodwill as we seek to make our energy sector a greater catalyst of our national development,” Uhuru said.

The Head of State said plans to reduce the cost of electricity through a rebate system are in the final stages.

Uhuru assured that government plans to do away with expensive Independent Power Producers are on course.

He said the Ministry of Energy has already started engagements with Independent Power Producers aimed at renegotiating the initial power purchase agreements.

“In realising the second tranche of the reduction in power bills, the Ministry of Energy has initiated engagements with Independent Power Producers aimed at renegotiation of power purchase agreements; so as to give better value for money for consumers,” he said.

The President kicked off plans to lower the cost of power in July last year where he promised manufacturers of 30 per cent reduction in cost of electricity.

Uhuru noted that the government has diversified the country's energy mix with focus on renewables like wind and geothermal energy which have lower feed-in tariffs compared to thermal energy.

In September, the President after receiving a report by a task force that has been reviewing Power Purchase Agreements between Kenya Power and Independent Power Producers (IPPs), reiterated that the cost of electricity MUST come down.

The reduction in consumer tariffs from an average of Sh24 ($0.21) per kilowatt-hour to Sh16 ($0.14) per kilowatt-hour is part of the recommendations by a 15-member Presidential Taskforce constituted to review the cost of electricity in the country as part of efforts to promote industrial growth.

In efforts to ensure implementation of the task force's recommendations, the Head of State made changes at Kenya Power and the Cabinet.

The task force led by, John Ngumi the chairman of the Industrial and Commercial Development Corporation (ICDC) proposed that Kenya Power takes the lead in formulation and related Power Purchase Agreement (PPA) procurement of the Least Cost Power Development Plan (LCPDP) and carry out due diligence and contract management frameworks for PPA procurement and monitoring.

In September, the President moved Dr Monica Juma from the Ministry of Defence to the Energy docket as Cabinet Secretary while Principal Secretary Gordon Kihalangwa was moved from the Ministry of Public Works to Energy.

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