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Kenya Power gets Sh10bn to cushion it against tariff cut
MPs have awarded Kenya Power Sh9.9 billion to offset an expected revenue shortfall the company will incur following the reduction of electricity prices
Members of Parliament have awarded Kenya Power Sh9.9 billion to offset an expected revenue shortfall the company will incur following the reduction of electricity prices by the government in January.
The National Assembly Energy Committee Chairman Jeremiah Kioni revealed the allocation in a sitting with Energy Principal Secretary Gordon Kihalangwa and acting Kenya Power managing director Rosemary Oduor on Tuesday.
However, it was not immediately clear whether the allocation has been made through the supplementary budget for the financial year 2021/22, which is set to be passed by MPs this month, or through the new financial year 2022/23 that is expected to be passed before the end of April.
“We have allocated Sh9.9 billion to cushion Kenya Power from the implementation of the taskforce’s reforms,” said the Ndaragwa MP.
This means that while consumers will continue to enjoy the lower electricity prices, they will pay more in tax measures that will be instituted by the National Treasury through the Finance Bill, 2022 to raise more revenue to cater for those spending needs.
Lower electricity cost
President Uhuru Kenyatta in December stepped up efforts to lower the cost of electricity by 30 per cent in two equal tranches.
The first phase focused on cutting system losses incurred by utility firm Kenya Power annually, while the second phase involves review of power purchase agreements (PPAs) the company has signed with dozens of independent power producers (IPPs).
Following the directive, the Energy and Petroleum Regulatory Authority (Epra) in January set new electricity tariffs by lowering the energy charge component of the power bill, which significantly slashed bills.
Now, in a twist, taxpayers are set to pay for the reduction in electricity prices through taxes instead of actualisation of the above measures, which were supposed to result in lower prices without taxpayers paying for the cut.
Mr Kioni put the PS Kihalangwa and Ms Oduor to task to provide a comprehensive report on how the company is set to utilise the allocation and submit it to the committee once Parliament gets back from its planned short recess.
