Fuel subsidies gobble up Sh67 billion, says CS Juma

Energy CS Monica Juma (left) and NMG CEO Stephen Gitagama

Energy Cabinet Secretary Monica Juma (left) and Nation Media Group CEO Stephen Gitagama during Sustainable Energy Conference at Olkaria in Naivasha on June 16, 2022. Dr Juma said the government has disbursed more than Sh67 billion in fuel subsidies this financial year.

Photo credit: Cheboite Kigen | Nation Media Group

The government has disbursed more than Sh67 billion in fuel subsidies this financial year to cushion Kenyans from the skyrocketing prices that have pushed up the cost of living, leaving many families in dire straits.

Energy Cabinet Secretary Monica Juma said Thursday that by the end of the month, the state will have spent about Sh84 billion on subsidies to stabilise pump prices.

The CS, however, called on governments to invest more in renewable energy, saying the price of crude oil is at an unprecedented level globally that will hurt many struggling economies.

“We are still taking some stabilisation measures. The situation globally underscores the need for harnessing renewable energy sources,” Dr Juma said during the Sustainable Energy Conference at the KenGen Geothermal Spa in Naivasha.

Not unique to Kenya

The CS said the situation is not unique to Kenya, adding that local pump prices are relatively better in comparison to other countries. She said the Covid-19 pandemic and the failed rains exacerbated the situation.

Dr Juma regretted that the high cost of power has stopped Kenya from realising its potential as an economic and technological powerhouse. She said the state seeks to provide affordable electricity without compromising on quality or reliability of supply.

The CS said the government’s goal is to diversify sources of power generation by focusing more on geothermal, hydropower and wind energy. “In the last 10 years, Kenya has become one of the continental powerhouses in clean energy generation. This all started with one goal which was universal access to electricity for all Kenyans,” she said.

Access was below 30 per cent, with the figures rising to 75 per cent in less than a decade. She said the government would invest in off-grid solutions to bring power to remote areas with the objective of achieving universal access by the end of the year.

Significant progress

“While universal connectivity remains an aspirational goal, the government has made some significant progress as well with the number of households connected to electricity increased from 2.3 million in 2013 to 6.2 million in 2022,” said Dr Juma.

President Kenyatta in March appointed a task force to review power purchase agreements (PPAs) signed between Kenya Power and all electricity generators with the aim of renegotiating the energy prices and other terms.

“This was in response to widespread outcry over high electricity prices for both individual consumers and enterprises. After six months of study, and by far the most complex review of PPAs ever undertaken in the country, the task force handed over their report with recommendations to, among other things, reduce the cost of power by 33 per cent,” said Dr Juma.

Kenya Electricity Generating Company (KenGen) chief executive Rebecca Miano said that while African countries are rich in resources like solar and wind, they remain mired in high levels of pollution caused by dirty fuels.

She said Africa is one of the regions that could benefit most from investing in clean energy resources. “The continent’s true potential as a global leader in renewables has been overshadowed by its dependency on fossil fuels, especially coal, which accounts for much of Africa’s total installed generation capacity,” she said.

In 2020, only nine per cent of all energy generated in Africa was from renewable sources.

Clean Development Mechanism projects

As part of green energy generation, KenGen is implementing six Clean Development Mechanism (CDM) projects that offset a cumulative 4,617,309 tonnes of Carbon dioxide equivalent (Carbon Credits) annually.

KenGen board chairman, General (Rtd) Samson Mwathethe, said climate change is already having a damaging effect across the globe.

“Since the 1960s, the story of climate change has metamorphosed from a theory to a reality. In Africa, rainfall patterns have changed, temperatures have continued to rise, our forests have continued to shrink and in a regrettable tale of events, the long rainy seasons are now becoming shorter and dryer,” he said.

The forum brings together stakeholders in the energy sector and seeks to address challenges hampering Kenya’s efforts to scale up the use of clean energy.

Make energy available

Nation Media Group board chairman Wilfred Kiboro said governments have to devise ways of making energy available, accessible and affordable. He blamed the sorry state of affairs on politics, corruption, lack of vision and bad policies. 

“Only people from privileged backgrounds have access to energy. This is unacceptable. States should make affordable electricity a human right. It should be enshrined in the constitution,” he said.

NMG chief executive Stephen Gitagama said the energy sector remains largely untapped. Kenya is one of the top 10 countries globally that have embraced green energy with over 90 per cent of its energy coming from hydrothermal, geothermal and wind.