The cost of electricity in Kenya has seen a consistent decline over the past twelve months, driven by the strengthening of the Kenyan Shilling against the US Dollar.
This was revealed by Kenya Power’s Managing Director & CEO, Dr. (Eng.) Joseph Siror, during a recent engagement with the Kenya Editors Guild.
Dr. Siror highlighted that the shilling’s gains have reduced pass-through costs to consumers, particularly forex and fuel expenses, which are heavily influenced by the dollar exchange rate.
“The strengthening of the shilling has significantly lowered pass-through costs, benefiting our customers,” said Dr. Siror.
He further noted that the decline in electricity costs has been bolstered by a review of the electricity tariff in April 2023, which introduced a three-year tariff structure. This structure, effective from July each year, has progressively reduced the base energy cost.
Since its implementation, the base tariff has dropped from KShs. 19.04 per unit in 2023 to the current KShs. 17.94.
However, Kenya Power has raised concerns over a potential reversal of this positive trend. The push to introduce wayleave charges on power infrastructure could increase electricity costs by up to 30%, a burden that would likely be passed on to consumers.
Dr. Siror explained that Kenya Power operates over 319,000 kilometers of power lines across all 47 counties. If wayleave charges are implemented at a rate of KShs. 200 per meter, it would amount to an annual cost of KShs. 63.8 billion.
“This represents approximately 30% of the energy sector’s revenue requirements, which would need to be recovered through monthly electricity bills. Such a move would make electricity unaffordable for the majority of Kenyans,” warned Dr. Siror.
The proposed wayleave charges also face legal hurdles. Section 223 of the Energy Act 2019 prohibits public entities from imposing levies on public energy infrastructure without regulatory approval, raising questions about the feasibility of the proposal.
As Kenya continues to benefit from lower electricity costs, the potential introduction of wayleave charges remains a contentious issue, with significant implications for both consumers and the energy sector. Stakeholders are closely monitoring developments as the debate unfolds.
