Kenya's electricity costs take a dip - CNBC Africa

Kenya's electricity costs take a dip

East Africa

by Elayne Wangalwa 0

Kenya’s cost of electricity has reduced significantly following the connection of an additional 140 Mega Watts (MW) to the national grid.

During the commissioning of the last phase of the 280MW of geothermal power by the country’s main electricity producer, Kenya Electricity Generating Company (KENGEN), President Uhuru Kenyatta noted that this move is anticipated to further stabilise the cost of electricity in East Africa’s biggest economy.

(READ MORE: KENGEN to boost Kenya's power output )

“By generating and injecting 280MW, we have driven the electricity cost by the 30 per cent which we had pledged last year. Manufacturers will have access to electric power at rates devoid of transformation costs,” Kenyatta said.

According to Kenyatta, the country is also likely to see an increase in export production and expanded employment opportunities for Kenyans.

“Electricity costs have been a huge component of industrial and household expenditure. Economic growth can be arrested by energy costs. My government is committed to reducing the cost of energy and the cost of production in order to accelerate development,” Kenyatta noted.

(READ MORE: Kenya's main electricity producer to increase output)

Following the additional MW to the power grid, the cost of fuel has fallen by 65 per cent to 2.51 Kenyan shillings per kilowatt per hour. With this in hand, Kenya is ready to start exporting electricity to its neighbouring countries.

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“We are sharing in the spirit of East Africa, solidarity and shared prosperity. The people of Rwanda are getting ready to import electric power and power transformation in their country as well,” Kenyatta said.

Rwanda’s President Paul Kagame noted, “As we produce electricity, as we continue to lower prices of electricity, what is expected is that the prices of other things of essentials are also going to come down.”

During an interview with CNBC Africa, Albert Mugo, the managing director at KENGEN said that, “Already Kenyans are feeling the full effect of it as it has reflected in the power bills. There has been a lot of preparation and work that has gone into this project. We had government put in over 300 million US dollars towards the drilling of the wells.”

The East African country is looking at increasing its national power output to 5,000MW by 2016 in order to spur industrial growth.

The Kenyan government said that it will spend about 2 billion US dollars in the medium term to upgrade its power distribution systems. The government identified energy as one of the infrastructural enablers of growth and macroeconomic stability, equity among others.

Meanwhile, plans are underway for the power producer to raise 15 billion Kenyan shillings through a rights issue to finance expansion of its power generating capacity.

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