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Inside govt's new plan to slash electricity prices by 15%

Electricity prices were supposed to be slashed in April, but the IPPs, which are controlled by influential organisations such as the World Bank, objected.

Kenya Power Live Line Team

Kenya Power is set to slash the cost of electricity by another 15% after the treasury offered a Sh7.05 billion subsidy.

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This comes after independent power producers (IPPs) rejected the drive to drop their prices and allow Kenya Power to lower customer bills.

In 2021, President Uhuru Kenyatta promised that the government would slash the cost of electricity by 30% in two phases of 15%.

The first phase which was implemented in 2022 involved the reduction of system losses by Kenya Power.

The second phase involved the renegotiation of contracts with IPPs to lower the price they sell electricity to Kenya Power.

The prices imposed by KenGen and private power producers were found to be worlds apart according to a task commission created by President Uhuru Kenyatta.

While KenGen sold power to the company at Sh5.48 per unit, IPPS sold the same to Kenya Power at up to Sh173 per unit.

The second phase was supposed to be implemented in April, but the IPPs, which are controlled by influential organisations such as the World Bank, objected to a unilateral drive to lower the price at which they sell electricity to Kenya Power.

The government has now decided to foot the cost of lowering the prices by giving Kenya Power subsidies to cushion customers.

The high cost of living has been a headache to make Kenyans who have struggled to keep up with the inflation which is at 7.1%, the highest in more than 2 years.

To shield KPLC from the effects of the electricity price reduction prior to the implementation of this second phase, the company has been allocated Sh7.05 billion in the proposed budget for 2022/23.

There is slow progress in implementing the recommendations of the Presidential Taskforce Report on the review of the power purchasing agreements (PPAs) to reduce electricity prices by 33 percent,” the Budget and Appropriations committee said.

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