The competitiveness of Kenya's manufactured goods in the global market is increasingly being undermined by the high cost of production, more so the high cost of electricity.
The cost of electricity keeps on going up despite government promises to the contrary, raising costs for manufacturers who pass them on to consumers.
This is why discussions this week in Parliament on the high power prices must come up with a roadmap on how to reduce the burden on consumers. The issue has been discussed many times in the House in recent years, but nothing much comes out of these deliberations.
At the core of the high costs are contracts that Kenya Power has with independent power producers (IPP). Many of these contracts have been found to be skewed in favour of the firms with the prices set at levels way above the market average, and with guaranteed payments whether they sell power or not.
This means that some private firms continue to reap huge profits at the expense of electricity consumers. Even with the high cost of fuel that the independent power producers use to generate electricity, compared to hydropower for example, it is preposterous that they sell the power at over three times the price KenGen sells to Kenya Power. Also, a cause for concern is that some of the private firms are paid more than others. There is need for clarity on why this is so.
As the MPs have pointed out, radical measures might need to be taken on some of the contracts including cancelling them. A recent attempt to renegotiate the terms of the IPP contracts seems to have stalled, even as Kenyans continue to get huge power bills. Starting this month, consumers will pay more following approval of new Kenya Power tariffs by the Energy and Petroleum Regulatory Authority. The Lifeline Tariff, for instance, which is used to cushion low-income households has seen its threshold reduced from 50 units per month to 30 units, meaning consumption above this will result to higher prices. Other tariff bands have seen significant increments.
The current power prices are unsustainable, and Parliament must find a way of bringing them down.