Higher electricity costs will hurt economy

Kenyans are in for a rude shock as a hike in electricity prices looms.

Kenya Power wants a 78 per cent increase in energy prices for poor consumers, should the energy sector regulator approve its new tariffs from April. Things could further spiral out of control, as the power utility withdraws the monthly subsidy that cushions poor households and introduces a tariff that lumps everyone together.

Should the Energy and Petroleum Regulatory Authority (EPRA) give the approval, this is going to be the first power price increase since 2018, putting immense pressure on consumers. Electricity prices for households could rise by a massive 117 per cent. Millions of households will be denied the subsidy, as the power utility seeks additional funds to upgrade its transmission network and boost profits.

It will be recalled that on assuming office last year, one of the first actions by President William Ruto was to scrap fuel and food subsidies, arguing that they were unsustainable.

The energy crisis is a reminder of one of the perennial election campaign promises, which is to lower the cost of power for households and industries to help boost economic growth. But this promise is always quickly forgotten once the election winners take office.

If the new tariff is granted, the cost of a unit of power for the usage of fewer than 30 kilowatts per month will increase by 35.3 per cent to Sh28.01, up from the current Sh20.70. The higher tariff will not just hurt household budgets, but will also raise the already high cost of doing business.

Higher electricity charges mean higher production costs for businesses, which can only hamper job creation. Access to electricity is crucial for small-scale enterprises such as hair salons and barber shops, welding units and food kiosks in markets.

The 24-hour economy that many aspire for can only be made possible by connecting electricity to homes and trading centres. So far, only 75 per cent of the population has access to electricity.

The energy sector is also vulnerable to cartels, as electricity is an essential service and many people will pay anything to avoid being disconnected. 

Every effort must be made to keep down the cost of power for households and businesses.


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