High power costs forces firms to relocate, close shop

Stakeholders are now calling for an end to Kenya Power's monopoly and the probing of the company's operations.

The high cost of electricity has adversely affected companies at the coast, forcing some to relocate to neighbouring countries or close down.

Milly Glass Works Ltd announced last month that it was setting up a Sh48 million plant in Ethiopia owing to the spiralling power costs in Kenya.

“We want to have a presence there. If we are making good profits in Ethiopia, definitely our main focus will be shift to that country,” Rajan Salvi, the company’s consultant, said

NATURAL GAS

Mr Salvi said the cost of production has greatly been affected by the high fuel prices.

“There is a 23 per cent hike in the power bill and the company uses 33,000 units of power daily. How do you expect us to compete?” he posed.

Mr Salvi said Tanzania has natural gas, which is cheaper.

“They generate electricity using natural gas. With the distinct advantage of natural gas, Tanzania is cheaper in terms of manufacturing,” he said.

He said 26 per cent of the production cost goes into power and fuel.

He said his company has employed about 2,000 Kenyans — directly and indirectly — but the high power costs have sent them back to the drawing board.

SOLAR POWER

Milly Glass Works is among the many companies at the coast which are feeling the heat over the expensive power costs.

In Tana River, Tana Water and Sewerage Company spends more than Sh1.3 million per month on electricity bills.

Also affected is the Coast Provincial General Hospital, the largest health facility in the region, which has seen the cost of electricity shoot from Sh2.5 million per month to Sh4 million.

"The high cost of electricity is really hurting us. We are now considering using solar power, which is more reliable and cheap," county chief health officer Dr Khadija Shikely said.

The hospitality industry is also hard-hit by the inflated bills, which has led to the closure of some hotels.

MONOPOLY

Hoteliers on Friday revealed that they had to seek alternative sources of power to keep their facilities afloat.

Mr Bin Ali Lufti, a hotel owner in Mombasa, called for the end to Kenya Power's monopoly in distribution of electricity.

“That’s when Kenya Power will improve and offer better services. I once paid Sh40,000 to Kenya Power in a month. Kenyans are suffering,” he said.

At Travellers Beach Hotel, sales manager Boniface Wafula said they had inflated power bills last year, forcing them to source for a solar power system to cover part of the hotel.

“Last year, we were forced to spend more than Sh4 million to install solar heating and lighting in some of the areas in the facility.

"We thought we had errors in our system but after the recent revelations, we now know that the problem was not with us,” Mr Wafula said.

INVESTIGATION

He said the hotel's management had to bring in energy auditors to verify the bills against actual consumption.

But Mombasa Cement, which is among the major cement manufacturers at the Coast, said it has not been affected by the inflated bills.

Mr Ferouz Hussein, the officer in charge of the electrical department, said this is because of the monitoring strategy they had put in place.

Ms Rukiya Rashid, the Kenya National Chamber of Commerce and Industry Mombasa branch chair, said a majority of the companies which have closed shop were in Mombasa.

“We received cases of industries shutting down since last year and the inflated bills is among the major reasons for the closure. The issue has affected the business fraternity and it should not be left to go just like that,” she said.

Ms Rashid called for the establishment of a commission to investigate Kenya Power’s operations.