Taxes, levies and adjustments are responsible for costly electricity

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

04 April 2021

The Member of the National Assembly for Garissa, Mr. Adan Duale, wrote to the House Speaker recently alleging that he has reliable information to the effect that the Kenya Power and Lighting Company (KPLC) buys electricity from Independent Power Producers (IPPs) at Sh23 per kilowatt-hour (kWh) instead of purchasing the same from KenGen at Sh0.50 (50 cents). He added that the IPPs buy the power from KenGen at Sh0.50 and offloading the same to KPLC at Sh23.

Are these allegations true? Thankfully, both KPLC and KenGen are listed in the Nairobi Securities Exchange and so their annual audited reports are publicly available. Furthermore, since the government holds more than 50 per cent of the shares in the two companies, they are classified as parastatals, consequently, their financial affairs are audited under the supervision of the Office of the Auditor General.

In the year ended 30th June 2020 (the latest audited period), KPLC reported that it bought 8,237 gigawatt-hours (GWh) of electricity from KenGen; and KenGen reported that it sold 8,237GWh to KPLC.

There is no indication anywhere in the KenGen audited report that it sold electricity to any other customer apart from KPLC. Thus, the allegation that IPPs buy electricity from KenGen is false.

Next, what is the average price that KPLC pays for the electricity it buys from KenGen? In the last financial year, KPLC bought 8,237GWh (or 8,237,000,000kWh) for a total of Sh41 billion shillings. This works down to just under Sh5 per kWh – a far cry from the alleged Sh0.50!

The Independent Power Producers sold a total of 2,913GWh (2,913,000,000kWh) and were also paid about Sh41 billion. Obviously, their electricity is a lot more expensive than that from KenGen. It comes to about Sh14 per kWh. Again, this is not close to the alleged Sh23.

It is worth noting that, from these figures, KenGen is, by far, the largest supplier of electricity contributing about 72 per cent of all the units. Still, this does not answer the implied question of why the consumer price of power is so high in Kenya.

There are three contributors to this: taxes, levies and adjustments. In my current bill, I was charged SH4,929.93 for the 312kWh consumed. This works to about Sh15.80 per unit. But the final amount payable is Sh7,677, or Sh24.61/kWh

These taxes, levies and adjustments increased the bill by 56 per cent! So, clearly, the way to tackle the high cost of electricity is to reduce these extra charges.