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Reprieve as regulator lowers cost of power

Fred Aminga @faminga

Households consuming up to 100 kilowatt-hour (kWh) will starting today pay reduced charges of Sh10 per unit after the Energy Regulatory Commission (ERC) spread lifeline tariffs to 100 units from 10 units that were announced in July 2018.

The move which is expected to cushion poorer households will, however, be determined by the normal variable charges including inflation, 16 per cent Value Added Tax (VAT), fuel cost charge and monthly forex charge.

“It means that those who were paying Sh1,100 per month will now pay about Sh750,” said ERC director general pervel Oimeke, maintaining that the lifeline tariff is set to accommodate households in the informal settlement, peri-urban and rural areas targeting some 5.7 million customers.

This is the second time the regulator has changed tariffs this year following complaints over the high cost of electricity which has spiked inflation particularly among the poor and small enterprises.

However, ordinary customers consuming in excess of 100kWh will not be affected by the changes.

Speaking at a Nairobi hotel while announcing the new amendments, Oimeke also announced a new set of tariffs for small commercial customers now grouped into two categories.

The first group is the small-scale consumer category consuming less than 100kWh per month, and who will also see their energy charges reduced from Sh15.60 per kWh to Sh10.00 per kWh.

“This will positively affect more than 67 per cent of small commercial consumers who will enjoy a 31 per cent reduction in their bills compared to October,” he said.

The new raft of changes however fell short of expectations from stakeholders, particularly the SMEs, who had banked on drastic changes in the cost of energy after President Uhuru Kenyatta demanded that the energy ministry ensures this group which is estimated to drive 73 per cent of the GDP is given reprieve.

Oimeke said the new changes are a result of ongoing consultations with stakeholders including legislators since energy is considered a major enabler of the Big Four agenda.

“We have only amended a bit of the tariffs, the others remain,” he said, even as Uhuru’s 30-day deadline looms.

The President ordered the Ministry of Energy to reduce the cost of electricity for small and medium enterprises within one month.

“I direct the Energy Cabinet secretary to review electricity tariffs within one month and come up with a sustainable plan to ensure the cost of power to small and medium-sized enterprises is brought down,” President Uhuru said during a two-day SMEs forum.

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