Acting Director General of the Energy Regulatory Commission Frederick Nyang attributed the reduction of the tariffs to rising energy generation especially from renewable sources like geothermal and planned wind power projects.
The less cost electricity will see Kenyans pay on average 11.2 percent less in cost compared to the current electricity costs in the year 2014-2015 and a further average less cost of 6.4 percent in the 2015-2016 period.
Nyang attributed the reduction to rising energy generation especially from renewable sources like geothermal and planned wind power projects.
He said in a statement that cost per kilowatt hour of electricity will reduce to 0.18 U.S. dollars from next month to June, before dropping to 0.15 dollars in 2015. During the fiscal year starting July 2015, the cost will fall further to 0.14 dollars.
The high cost of electricity in Kenya has been blamed for driving inflation high and making Kenya’s manufactured products uncompetitive in the regional market, especially compared to products from Egypt and South Africa where the cost of electricity is more than half less the cost in Kenya.
The news will come as a relief to both domestic and industrial consumers, and indicates gains Kenya is making following accelerate investments in new generation.
The costs are expected to keep reducing as the country implements ambitious power generation scheme of generating 5,000 megawatts (MW) of new electricity in the next 40 months.
Next month, Kenya will commission additional 140 MW of new geothermal generation at Olkaria IV plant, to be followed by a similar amount of new generation in December 2014.
According to the Principal Secretary in the Ministry of Energy and Petroleum Joseph Njoroge, Kenya government plans to lower the cost of power to the consumers to as low as 0.7 dollars per kilowatt hour from a high of about 0.19 dollars per kilowatt hour.
The new pricing review also comes at the time when financing for the country’s largest wind power project, the 300 MW Lake Turkana Wind Power Project has been completed.
In the past week, the European Union provided 25 million euros investment grant to plug the remaining gap in financing for the Lake Turkana Wind Project.
This will help to ensure construction can start as soon as possible, the EU Delegation in Kenya said in a statement.
This investment grant is being provided on top of more than 200 million euros in debt financing that has received board approval from the European Investment Bank (EIB).
Listed and majority state owned biggest power generator KenGen said it is also in the process of issuing an asset-backed bond to finance generation of new 350 MW geothermal power expected to come online by 2017, said its acting CEO Simon Ngure.
Kenya has an installed electricity capacity of 1,600 MW with a peak power demand of 1,500 megawatts growing at an average rate of 8 percent a year, according to the Kenya Power and Lighting Company.
