Kenya Power and Lighting Company (KPLC) has shelved plans to review power tariffs this year, citing the current tough economic times Kenyans are facing due to rising inflation.
The power distributor reviews power tariffs every three years and was due to announce new tariffs on 30th June 2011 in accordance with the Energy Regulatory Commission (ERC) tariff review policy. The tariffs were last reviewed in 2008.
However, Kenya Power, as it is now known after last week’s re-branding, said that it had requested that the ERC and the Ministry of Energy postpone the application for a tariff review until the current economic situation in the country improves.
“Cognizant of the current serious unfavorable social and economic circumstances in the country; and being sensitive to the plight of Kenyans, in May 2011, Kenya Power, in consultation with the Ministry of Energy and the ERC, requested for postponement of the application for a tariff review, until the national social and economic situation improves,” said the power distributor in a statement.
The announcement comes as a major relief to millions of Kenyans who already have to contend with the high cost of living fuelled by high fuel and food prices as a result of spiralling inflation that rose to 14.49 per cent in June 2011.
Kenya Power said that reviewing power tariffs under the prevailing economic conditions would also have been counter-productive to its efforts of upscaling the number of Kenyans connected to electricity.
The government has an ambitious plan to connect 40 per cent of the population by 2020.
Kenya Power said of this ambition: “In order to meet this target, as well as the high demand for electricity occasioned by a fast growing economy, Kenya Power needs to procure additional power from existing power generating firms, and from new ones that are commissioned to set up plants.”
The power distribution firm noted that it therefore needs to generate revenues in order to purchase the additional bulk power. This, in addition to meeting operational costs of the expanding distribution network and customer services led to yesterday’s announcement that it had applied for a future review of the power tariffs.
Kenya Power in conjunction with the Kenya Electricity Transmission Company (Ketraco), plans to invest Sh141 billion in the next three years in a major upgrade and installation of new power distribution and transmission capacity to meet growing demand for power by businesses and households.
The extensive infrastructural layout to cover an estimated 5,498 km is expected to address existing transmission weaknesses and power losses while at the same time attempting to meet the growing demand for power by enhancing connection across the country.
The government estimates that only 10 per cent of Kenyan households have electricity and it is setting a target of raising access to 40 per cent by 2020.
The capital intensive project will see the expansion of the country’s transmission and distribution from the current 41,486 km to 46,984 km. Bids for the KPLC tender close on 8th March 2012.
The previous day, the Consumer Federation of Kenya (Cofek) had opposed the KPLC proposal to increase the cost of power to consumer by 25 percent as “ill – timed”. They argued that for a public company such as KPLC that made Sh 5.6 billion pretax profits in the last financial year and was able to pay generous dividends of Sh 8 per share, it is possible for the company to indefinitely delay the tariff review to more appropriate time.