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Kenya Power is set to reduce electricity bills by another 15% in the coming months following the National Treasury offer of Ksh7.05 billion subsidy to protect the company from financial harm.
According to a report by the National Assembly's Budget Committee, the Treasury gave the subsidy after the Independent Power Producers (IPPs) refused to decrease their tariffs and allow Kenya Power to lower consumer bills.
The government cut power costs for the first time in January and was set to do so again in April, but IPPs objected.
The IPPs maintained that the government has no unilateral right to tamper with contracted capacity or payments, and that the government must uphold Power Purchasing Agreements (PPAs) inked more than two decades ago.
IPPs claimed to have spent billions of shillings on power plant construction, using a combination of debt and shareholder monies derived through PPAs or wholesale electricity tariffs as justification.
To continue forward with its objective to lower the power rate, the government has agreed to grant subsidies to both Kenya Power and Kenyans to help them cope with the high cost of living.
“To shield KPLC from the effects of the electricity price reduction before the implementation of this second phase, the company has been allocated Sh7.05 billion in the proposed budget for 2022/23,” the Budget and Appropriations committee said.
The price of 50 units of electricity has nearly quadrupled since President Uhuru Kenyatta assumed office in 2013, going from Ksh508 in July 2013 to Ksh945 in December last year before dipping to Ksh769 in February 2022.
The lower electricity prices come at a time when Kenya's inflation rate touched a 27-month high of 7.1 percent in May, pushing households to cut back on their spending and purchases.