A Review of the Nigerian Energy Industry

Govt denies Kenya Power rate increase

uhuru kenyatta-85219 August 2013, Nairobi — Kenyan power consumers breathed a sigh of relief last week with a government decision overturning an attempt by Kenya Power to double new connection charges from the current $411 to over $882.

A cabinet decision from a meeting chaired by President Uhuru Kenyatta overturned the decision after weeks of resistance from consumers that the new rates would lock out prospective power consumers.

“We are alive to the fact that the new rates are over and above the reach of most households in Kenya. Our commitment is to connect as many Kenyans to the national grid as possible, this is the only way we will achieve our development goals,” said a communique sent to newsrooms from the cabinet meeting.

The meeting further composed a task force to look into the actual cost of connections as the power utility firm termed the current rates as unsustainable.

To cushion the company from the financial downrun, the government injected some $31.7 million into the company. The amount is expected to connect a further 100,000 users over the next three months.

“The government has recognised that high cost of new connections is a challenge to most citizens who wish to connect to the grid,” said Kenya Power Managing Director Ben Chumo.

Chumo added that the government is to conduct a study in the next three months to determine the actual cost of new connections. The power company had hiked the fees In January citing a rise in the cost of materials used for connection.

“We have been subsidising connectivity using our own resources to plug the gap between the actual cost of new connection and the cost set in 2004, resources meant for other critical projects, such as improvement of quality of power and reduction of blackouts,” he said.

In 2004 the Kenyan government embarked on a programme to facilitate accelerated electricity access and introduced the $411 connection charge for a single phase and $576 for a three phase connection.

In that period new connections rose annually from 48,949 in 2004to 307,101 in 2012.

The accelerated new connections increased the customer base from 735,000 to 2.2 million representing an increase of 180 percent.

This figure is expected to rise further as a result of the revision of the charges.

– East African Businessweek

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