Kenya's government rejects 200% rise in power tariffs

10th May 2013

By: Reuters

  

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NAIROBI - Kenya's government has rejected a proposal by state-controlled power distributor Kenya Power to triple a fixed monthly charge paid by industries, saying the move would hurt the ability of Kenyan businesses to compete.

Businesses had long complained of high electricity costs and unreliable supplies, which they said made them uncompetitive compared to rivals in the region and beyond.

Halting plans by Kenya Power, the country's sole electricity distributor, to raise revenues by boosting tariffs, could push it to seek funds from investors to help finance plans to boost capacity and expand distribution.

President Uhuru Kenyatta, who was elected with his deputy William Ruto in a March vote, told the opening of parliament in April that his government would seek to boost power supplies and lower costs to Kenyans.

"Kenya Power has to sort out any inefficiency in its operations," Ruto told officials on Thursday, according to his office. "The government will not accept any proposal to increase power tariffs. It is a burden to the country."

Kenya Power said in February it would raise commercial rates charged to manufacturers by about 213% to 2 500 shillings a month by June 2015. It also aimed to more than double household tariffs to 300 shillings a month.

"We know what power does to the competitiveness of our products and we need to reduce the prices so that we can have a fair share of the market in the region and beyond," Ruto said.

Kenyan industries pay 17.3 US cents a kilowatt hour while their South African rivals pay 5.5 US cents, industrialists said.

Officials from Kenya Power and the ministry of energy were not immediately available for comment.

Edited by Reuters

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