President Kenyatta hints at reduction of electricity tariffs

The government has hinted at possible removal of a number of tax and levies that have made the cost of electricity remain high.

According to the head of state, the high cost of power remains a major impediment to growing the economy with manufacturing at the helm of his development agenda.

The move comes as the Energy Regulatory Commission evaluates the current tariff regime, but pressure from private sector players could see the cost of power come down sooner.

President Uhuru Kenyatta said energy costs have been a top concern for most Kenyans, with the government keen to get an effective electricity costing model.

“We are also in discussion with a view to cutting some of the taxes and levies on power bills or, and I don’t want to raise your hopes, removing them altogether,” President Kenyatta said during the commission of Coca Cola’s new Sh7bn hot fill line.

Power bills currently attract VAT of 16 percent with levies to the Water Management Authority and the Energy Regulatory Authority.

Kenya Power also factors in fuel costs, forex and inflation adjustments to calculate electricity bills.

The government has been seeking to get a more reflective model that only factors in the real cost of energy.

The sentiment gives further hope as power bills are set to fall further as KenGen ramps up generation of cheaper hydro power.

Energy Cabinet Secretary Charles Keter said hydro-electric dams have risen to a three-year high following months of heavy rains.

With the dams full, Mr Keter power bills to remain low until the end of the year.

“At least we are safe and these dams will take us until December,” Mr Keter said.

According to the ministry of energy, hydro and geothermal power account for estimated 90 percent of the power being fed into the grid.