Bernard Gitau @benagitau
It will be a delicate task for the ministry of Energy and Energy Regulatory Commission (ERC) following President Uhuru Kenyatta’s directive yesterday that power bills should come down within a month to cushion small and medium enterprises from the high cost of doing business.
The two agencies will walk a tight rope given that Treasury had already factored in revenue from numerous levies reflected in power bills.
Looking at the breakdown, a Sh300 power token, a major chunk of the levies go to taxes at Sh39.78, followed by fuel index at Sh33.79 and rural electrification programme (REP) which takes Sh10.68.
These levies gobble up about 30 per cent of the electricity cost, and could be the possible areas set to be reduced to make any significant dip in power tariffs.
But here lies the dilemma: This is the revenue needed to actualise Big Four projects on one hand while on the other cheap power is a key catalyst for the programme, especially the manufacturing component.
Other levies factored in the Sh300 token include Water Resources Management Authority (Sh0.35); Energy Regulatory Commission (Sh0.4); Forex adjustment (Sh.067) and inflation adjustment (Sh0.67).
Thus, the actual amount of electricity units that the consumer receives is 13.52 Kwh valued at Sh213.66.
Speaking at Strathmore University during the Round Table forum for SMEs, the President apologised to the enterprises for his administration inactiveness in addressing their challenges.
“SMEs provide employment to over 75 per cent of the workforce and we must agree on the issue of financing them, improve infrastructure and we must deal with the cost of electricity,” the President said.
During the forum, the President declined to read the written speech, saying it will only embarrass him since matters raised needed urgent action and reading policy matters will not help much.
“I do not want to embarrass myself reading this written speech, we must come back here within a month with solutions,” said Uhuru.
Cheap energy has the potential of transforming lives and accelerating growth across multiple sectors. Within the purview of the Big Four development agenda, Kenya is banking on the manufacturing sector to spur economic growth by contributing 15 per cent to Gross Domestic Product by 2022, against the current 8.37 per cent.
Analysts say that while the sector has potential to advance socio-economic development through increased and diversified exports, reduced import bills and employment creation.