Naivasha SEZ firms get huge power discounts

Geothermal Development Company steam well in Menengai. Firms at Naivasha SEZ will pay less for geothermal power. [Kipsang Joseph, Standard]

Companies that will operate at the Special Economic Zone in Naivasha will pay up to a third of what other power consumers pay for electricity.

The industries that will operate at the SEZ will pay Sh5 per unit of power they consume. This is cheaper than the Sh 15 per unit that  small and medium consumers pay. Even large commercial and industrial consumers are currently charged Sh10.10 per unit.

This basic cost of power is however subject to other costs including government levies and taxes that push up the cost of power.

At Sh5, the cost will be lower than the Sh9 per unit that the government has in the past promised, to make the country a competitive manufacturing destination.

The Energy and Petroleum Regulatory Authority yesterday published the new tariff for the Olkaria-Kedong SEZ, which is being put up in close proximity to the Suswa Standard Gauge Railway (SGR) terminus.

“Notice is given pursuant to… the Energy Act 2019, that EPRA has approved the applicable tariff of Sh5 per kilowatt hour (kWh) for the Olkaria-Kedong SEZ in Naivasha,” said the energy industry regulator in a gazette notice yesterday.

The SEZ is located close to the geothermal power fields and electricity transmission over short distances has played part in giving investors a cheap tariff.

The move is in a bid to attract investors, particularly manufacturers in the country as the government eyes to increase its contribution to the economy to 15 per cent by 2022 from the current eight per cent.

Endowed with geothermal

In a response to queries as what informed developing a new tariff for the SEZ, EPRA Director General Pavel Oimeke said it was “in a bid to promote the Big Four agenda as well as Naivasha, especially Olkaria region, is endowed with geothermal resources. Additionally, the government of Kenya has developed the geothermal fields”.

The government recently said it has found an anchor investor. The Industrialisation ministry in December said that Danish brewer of Turbog and Carlsberg beers plans to invest $45 million (Sh4.5 billion) in a factory in the SEZ.

The firm will produce Tuborg, Carlsberg, Holsten and Kronenbourg beers, as well as Somersby Cider at the factory.

EPRA has also developed an additional tariff for commercial and industrial consumers connecting at 220 kilovolts (KV), who are essentially large manufacturers.

The consumers, who will be categorised as CI6 (commercial and industrial – category 6), will pay Sh7.99 per unit of power they consume while this will go down to Sh3.995 per unit during off peak hours. This is in comparison to CI5, who are currently the largest power consumers connected at 132KV, who pay Sh10.10 and Sh5.5 in the off peak periods.

The charges per unit for commercial and industrial tend to go lower depending on the size of the consumer with CI5 paying the least, but also account for the largest share of revenues to Kenya Power owing to the high consumption of electricity despite being few in terms of numbers.

Street Lighting category – costs mostly borne by counties – however pays a lower charge of Sh7.5 per unit but on account of being highly discounted.