High electricity cost affecting industrial productivity

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As fuel prices have risen so has electricity cost in Kenya and Kenyan industries are now faced with the harsh reality of business closures and likely relocations.

The country will not only lose out on new investments but will also have current industries relocating to neighbouring countries with lower energy costs.

In the past, companies have chosen to move to other COMESA countries from where they produce and export back to Kenya without paying duty. Such a measure will lead to huge job losses and increased poverty.

The power increase is expected to affect all types of producers in the country including horticulture, Jua Kali sector, tourism and manufacturing among others.

The Kenya Association Manufacturers (KAM) has however, received strong protests from its members over the recent increase in electricity costs and the Kenyan population is reportedly enraged at the impending hardship.

Analysis shows that the overall effective cost per unit of electricity for the industrial sector has gone up from Ksh 8.00 to Ksh15.00 on average. In September fuel cost adjustments are set to go up again from Ksh7.69 to Ksh7.78 per unit; and the cost is expected to increase further.

In the near future, industries will not have a choice but to increase commodity prices which will add to the already very high cost of living, further perpetuating inflation.

High cost of living  In the past year alone, food prices have shot through the roof while other household essentials have undergone unprecedented price hikes. Coupled with a global financial meltdown, this situation has been mostly harsh on the poor. The Haiti food riots which began in April, 2008, quickly spread like wild fire to Egypt, Senegal, Burkina Faso, Ethiopia, Indonesia, Madagascar, Ivory Coast, Senegal, Cameroon... According to experts, this situation was in part created by careless government policies, the rising popularity of bio-fuels as well as the global financial crisis, among other factors...
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