Govt Initiates a Plan to Reduce Electricity Prices

Treasury Cabinet Secretary Njuguna Ndung’u has highlighted how the high electricity costs can be brought down amidst the rising cost of living.

Appearing before the Energy Committee led by Mwala MP Vincent Musyoka on Tuesday, the CS recommended a review of various levies which are deducted during token purchases.

Ndungu highlighted the Water Resource Management Authority (WARMA) Levy, the Energy Regulatory Commission (ERC) Levy and the Rural Electrification Program (REP) Levy.

The levies are usually charged and submitted to various government agencies for the implementation of various different programmes, including rural electrification, among others.

Nonetheless, he maintained that the 16 per cent Value Added Tax (VAT) charged for electricity could not be reduced as proposed by the legislators.

“Members of the Energy were also concerned about the various taxation measures and levies impacting on the overall cost of power and how the same can be managed to offer relief to Kenyans.

“In his response, Ndung’u informed the Committee that the only national tax charged on electricity is VAT at the rate of 16% and that removal of the same will introduce discrimination in the VAT tax regime,” he explained.

Ndungu added that the review of the levies could soon see Kenyans pay less for electricity and, in the long run, attract investors into the country amidst reports that Tanzania was rising to become a leading investment hub in the region.

Currently, from a Ksh200 token purchase, Ksh24 goes to VAT, Ksh6.23 goes to the Rural Electrification Program (REP) Levy, and Ksh0.1 to the Water Resource Management Authority (WARMA) Levy. 

On the other hand, the Treasury CS noted that the government would also need to address the power outages to make Kenya more attractive to investors.

The MPs are set to table a report on the CS’s recommendations in Parliament in the coming weeks, highlighting how power costs can be reduced.