Manufacturers now seek cheaper off-peak power tariff

Manufacturers have asked the government to restructure the subsidized off-peak tariff to make it cheaper and more accessible to customers to reduce the cost of doing business.

The Kenya Association of Manufacturers (KAM) lobbied for energy incentives for manufacturers when it appeared before the Senate Committee on Energy on Thursday. The committee is chaired by Nyeri Senator Wahome Wamatinga.

During the sitting, energy expert Sylvester Makaka emphasized the need for policy reforms to support renewable energy adoption, highlighting its environmental benefits and potential to stabilize energy supply for manufacturers.

Makaka advocated for restructuring the Time of Use tariff to encourage off-peak energy consumption, optimizing geothermal energy use, and reducing reliance on costly petro-thermal generators. He further called for the implementation of net metering regulations and wheeling tariffs to boost renewable energy adoption.

The Time of Use tariff was introduced by the administration of then President Uhuru Kenyatta in December 2017, offering subsidized power rates to arge consumers for using electricity during off-peak hours.

The move was aimed at reducing energy wastage due to curtailment during off-peak hours specially at night.

The ToU offers large power users a discount of 50% for electricity consumption during off-peak hours as long as they have hit their monthly consumption threshold.

KAM acting CEO Tobias Alando emphasized the role of energy in driving industrial growth, noting that manufacturers consume 67% of the country’s electricity, particularly large commercial and industrial consumers.

He highlighted that Kenya’s electricity tariffs are 70% higher than those of neighboring countries, which significantly undermines the competitiveness of local industries.

“A balanced approach to energy pricing is essential. Fair and predictable energy costs will enable manufacturers to plan and operate more effectively, ultimately driving the growth of the manufacturing sector,” said Alando.

Members present in the meeting were Vice Chairperson Elgeyo Marakwet Senator William Kisang, Narok Senator Ledama Ole Kina, and Tana River Senator Danson Mungatana.

While the ToU tariff was initially targeted for industrial customers, the Energy and Petroleum Regulatory Authority (EPRA) introduced the tariff for small commercial customers categories and e-mobility tariff customers.

Off-peak hours run between 10pm and 6am during weekdays, 2pm to 8am on Saturdays and the whole on Sundays and during public holidays.

According to EPRA, some 8,765 customers benefited from the ToU tariff in the year ended June 2024, saving Ksh1.838 billion in power costs.

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