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Treasury allocates Sh2.7 billion to Kenya Power to subsidise power cost to Sh35,000 for a single phase

NEWS
By By MACHARIA KAMAU | Aug 15th 2013 | 3 min read
By By MACHARIA KAMAU | August 15th 2013
NEWS
Kenya Power says the Government will give it Sh2.7 billion to subsidise new electricity connections.[PHOTO: FILE/STANDARD]

By MACHARIA KAMAU

The Treasury will give Kenya Power Company Sh2.7 billion over the next three months to enable the firm revert to older lower rates of connecting new customers to the national electricity grid.

This is expected to cushion the power distributor from incurring heavy operational expenses and diverting money that the company said was meant for other critical aspects of its business to subsidise new connections.

This is as the Government undertakes a study to establish the true cost of electricity connections. The study is expected to be finalised by November this year.

The money from the Government will also be a reprieve for new customers that had been locked from accessing electricity connection owing to the prohibitive rates imposed by Kenya Power beginning January this year.

single phase

Thus, the firm will immediately revert to the old rates of Sh35,000 for a single phase connection down from Sh60,000 that it has been charging throughout this year. It will also enable the firm charge Sh49,000 for a three phase connection from Sh70,000.

The company said it had reverted to the old rates on August 12 and customers that had been serviced under the higher rates of Sh60,000 and Sh70,000 would not get a refund.

The power retailer however, maintained that the old rates are unsustainable because a lot has changed in the 10 years since the rate was last revised.

“The Government recognises that the high cost of new connections is a challenge to most citizens who wish to connect to the grid,” said Dr Ben Chumo, acting managing director Kenya Power.

Chumo said the Government has decided to support Kenya Power in maintaining the old rate of Sh34,980 for a single phase and Sh49,080 for a three phase connection for the next three months — September, October and November — for 100,000 new connections by injecting Sh2.7 billion for the exercise.

“The Government through the ministry of energy has detailed the Energy Regulatory Commission to conduct a study that will determine the actual economic cost of new connections, to be ready in the next three months.”

The firm has been charging the new rates since January this year, which has seen many new customers that are unable to raise the fees being denied connections. The Government however, on Tuesday instructed Kenya Power to revert to the older rates, noting that the high rates had made it difficult for many to access electricity connections.

Reduction of blackouts

Chumo noted that the since 2004, when the cost of connecting new customers to the national power grid was revised, the cost of operations had gone up significantly.

He said the cost of the elements that go into giving new customers electricity connection had more than doubled over the 10 years, which meant the power firm has been absorbing the costs.

“Kenya Power has been subsidising connectivity using its own resources to plug the gap between the actual cost of new connection and the cost set in 2004. These resources are meant for other critical projects such as improvement of power quality and reduction of blackouts,” he said.

“For instance, between 2007 and 2011, the cost of wooden poles rose to Sh12,150 from Sh8,382, the cost of cut-out fuse rose by 280 per cent to Sh1,224 from Sh437, while a 16 millimetre cable rose 220 per cent to Sh86 from Sh39.”

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