President William Ruto has announced a preferential electricity tariff of Ksh10 per kilowatt-hour (kWh) for investors operating in Special Economic Zones (SEZs).
The President said the lower power cost is part of government efforts to reduce the cost of production and make goods manufactured in Kenya more competitive in both regional and international markets.
Ruto made the announcement on Tuesday, September 8, at State House, Nairobi, during the signing of an agreement for the development of the Mombasa Special Economic Zone by a private company.
He said affordable and reliable electricity would play a key role in supporting Kenya’s industrialisation plans.
“This includes a preferential electricity tariff of Ksh10/kWh for special economic zones investors,” Ruto said.
The President said the government would continue investing in infrastructure needed to support industries and attract more investors into the country.
“Our objective is straightforward: to lower the cost of production so that goods made in Kenya can compete successfully in the region and the global market,” he added.
Government targets manufacturers
The preferential tariff is expected to make SEZs more attractive to manufacturers, particularly businesses that use large amounts of electricity in their operations.
Electricity is among the major costs faced by manufacturers, with high energy prices often affecting the final cost of locally produced goods.
The announcement comes at a time when households and businesses outside the SEZ programme are dealing with increased electricity costs.
Recent electricity bills have seen consumers pay varying rates depending on their level of consumption and monthly adjustments approved by the Energy and Petroleum Regulatory Authority (EPRA).
In August, EPRA announced additional charges amounting to Ksh4.70 per kWh.
The increase was largely attributed to the Fuel Energy Cost Charge, which stood at Ksh3.51 per kWh, alongside a Foreign Exchange Fluctuation Adjustment of Ksh1.1777 per kWh and a Water Resource Management Authority levy of Ksh0.015 per kWh.
This has left many consumers paying significantly more per unit once the different charges and taxes are factored into their bills.
Mombasa SEZ to be developed in phases
The Mombasa SEZ, one of the zones announced on Tuesday, will be developed in phases.
Phase One of the development will take up an area of 40 hectares and it is expected that it will be completed within six months.
The project is expected to support the activities of manufacturing, logistics, warehousing and distribution because of the strategic location of the Port of Mombasa.
It is anticipated that the establishment of the SEZ will enable industries to locate near the port and therefore save time and money on the transport of goods to other regions in Kenya as well as neighboring countries.
Thus, the low cost of electricity is expected to form part of the incentives that will lure investors into the SEZ to support Kenya’s manufacturing sector.
