Raising cost of power will hurt suffering Kenyans and the economy further

High electricity cost in Kenya has in the past seen investors relocate to other countries, including in the East Africa region. [David Gichuru, Standard]

The planned increase in the cost of power is ill-advised. As such, the government should consider retaining the electricity tariff in place at the moment to cushion Kenyans from further rise in the cost of living.

The Energy and Petroleum Regulatory Authority is at the moment reviewing the tariff that it published in January this year and which expires at the end of this month. The tariff was published following a directive by former President Uhuru Kenyatta and resulted in a 15 per cent drop in power costs.

All indications are that the new tariff will further push up the cost of power in the country. Already, the cost of power is high and contributes to the high cost of living.

More costly power will come at a time when Kenyans are struggling to make ends meet, with the prices of nearly all goods and services having gone up within the last year. To make matters worse, the government scrapped subsidies on maize flour that was expected to cushion Kenyans from high cost of the staple as well as partially did away with the subsidy on petroleum, which is key in production and transport processes and whose higher prices also translate to spike in prices of essential products.

Even with the 15 per cent reduction in electricity that was effected in January, power prices have remained high. The previous government was looking into ways of lowering it by another 15 per cent and bring the total reduction to 30 per cent.

This was however not to be as the private players in the power sector declined the government proposals to review their agreements with Kenya Power that would have lowered their tariffs.

Additionally, the 15 per cent reduction was wiped out in September, when components of the power such as the fuel cost charge, inflation adjustment and the foreign exchange charge were revised upwards.

Thus, while the energy charge remained lower than what Kenyans were paying last December, the total bill is higher today, pushed up by the high cost of living, rising crude oil prices and a weak shilling.

Revising the tariff and pushing up the cost of energy further would significantly impact Kenyans.
The discussion around the high cost of energy in Kenya and its repercussions is not new. If anything, it has been a key concern for previous administrations.

High electricity cost in Kenya has in the past seen investors relocate to other countries, including in the East Africa region. The cost has also denied the country new investments by foreigners.

While pundits have argued that the cost of power is not the only consideration for investors shopping for a destination to invest their, experience has showed that cheap and reliable electricity is key in attracting industries - which are key for job and wealth creation - to set up in any country.

It would be advisable therefore for the government to halt any plans to raise the cost of electricity for the sake of Kenyans, who have been pushed to the corner by the current economic situation, and the struggling industries. Cost of power ought to go down, not up.