March 4, 2013 § Leave a comment
Two years ago when Kenya Power re-branded, I honestly think they grew horns. This week they were at it again pushing for a review of the already high electricity tariffs by ERC which will push tariffs up by between 24-40% and this with the full backing of Ministry of Energy.
Kenya is quickly turning into one of the most expensive places to set up and run a business majorly due to prohibitive energy costs. Kenya Association of Manufactures and Kenya Private Sector Alliance are already warning of job losses should the tariffs be implemented. That is something our fragile economy cannot afford. Not long ago a few Multi-National companies closed shopped and shipped some of their Manufacturing to Egypt and South Africa due to increased cost of doing business in Kenya majorly high electricity costs. Compared to other African Countries, we fare miserably. Here are some comparative prices: Egypt $0.04/kwh, South Africa $0.07/kwh, Uganda $0.08/kwh, Tanzania $0.09/kwh and Kenya $0.23. Kenya Power intends to use the money raised from the Tariff increase to finance the setting up of new power generation plants. But wait a minute, i thought thats the work of Kengen? Sounds suspicious as it comes at a time when Kengen is issuing asset-backed bonds worth 30billion!! Kengen supplies 74% of all Kenya Powers Electricity with the rest coming from independent Power producers. Why was Kengen and Kenya Power even split? For both of them to profit, the Kenyan consumer pays a higher price. Kenya Power pays $0.025/kwh for electricity from Kengen. If the cost of production is this low, why is Kenya Power charging kenyans almost ten times what it pays for? It is tragic that no Presidential Candidate has brought up the issue of high energy costs? How do they expect to create jobs in such a hostile environment? It is laughable that the Permanent Secretary says that tariffs will come down in 2020. Power profits are supposed to come from new connections and sales but not price hikes. Higher tariffs would bring about a domino effect; job losses, inflation, destabilize the economy, increase poverty levels etc. The consumers can only pay much. This time, Kenya Power has pushed its luck too far. Its time we did away with Kenya Power’s management as they have run out of ideas. Even better, we do away with Kenya Power’s Monopoly. Kenya Power is one parastal leaching on Kenyans.
“I don’t think we can go back to the old days. But I think that what the government needs to do is it needs to make sure that the pricing is fair, that you don’t have monopolies out there, so that people don’t have a chance to compete” Dan Glickman