Uhuru tells sellers to lower costs of commodities
What you need to know:
- President Uhuru Kenyatta said failure by manufacturers to transfer the benefits of cheaper power into lower costs of commodities was stifling the government’s efforts to reduce the cost of living and create more jobs.
- Kenya Private Sector Alliance chief executive officer Carole Kariuki admitted that there was a need to pass the benefits of cheaper power to consumers but said the fall in energy cost would be a good measure for only products that highly depend on the cost of power.
President Uhuru Kenyatta has called on local manufacturers to pass the benefits of the lower cost of power to the consumers or risk being driven out of business by competition.
The president said failure by manufacturers to transfer the benefits of cheaper power into lower costs of commodities was stifling the government’s efforts to reduce the cost of living and create more jobs.
“As the private sector, you need to start considering whether you are transferring the benefits of reduced costs to your customers or are you just adding that to your bottom line,” he said. “If you are not going to be competitive and just fatten your bottom line, we live in a globalised world and people will start buying from other countries, including China. You can increase your profits today but tomorrow you are out of business and when you close up shop, those are Kenyans out of jobs.”
The president was speaking at State House at an energy summit to examine the progress made towards achieving the promised 70 per cent power connection to Kenyan households by 2017, and map the way forward in lowering the cost of the same.
'A NEED'
Kenya Private Sector Alliance chief executive officer Carole Kariuki admitted that there was a need to pass the benefits of cheaper power to consumers but said the fall in energy cost would be a good measure for only products that highly depended on the cost of power.
Her Kenya Association of Manufacturers counterpart Phyllis Wakiaga said: “The cost of power has really dropped and we really commend the ministry but if you look at our competitors like Egypt and Ethiopia, they have far cheaper rates".
The president also blamed lengthy Independent Power Purchase agreements for hampering Kenya’s dream of cheaper power. The government was still tied to paying close to 10 Independent Power Producers (IPPs) despite not using their expensive electricity, he said.
He called for a review of all the IPP contracts with a view to terminating those hindering efforts to lower the cost of electricity as the country adds geothermal power to the national grid.
Participants had questioned why the government was still paying the IPPs that use diesel generators to supply electricity, while the country had been able to generate more than 400mW of cleaner and cheaper energy since 2013.
President Kenyatta also called for transparency in making such power purchase arrangements.
“We must ask ourselves whether we are negotiating with the IPPs in a transparent manner. I believe there has been a lot of cloud in that area, resulting in us signing agreements that have cost this country heavily,” he said.
The IPPs were first contracted in the 90s when Kenya had a power shortage. The producers are usually paid just to be on standby. The charges are loaded on the consumers’ electricity bills.
