Electricity charges for single-phase connections could drop to an average of Sh 20,000 under a new model being developed by the government and African development Bank (AfDB) to boost access of the utility by poor households.
The proposal by the government already sent for discussion by the AfDB board will also craft mechanisms to allow small consumers and new connections pay the new rate through a debt instrument payable through their monthly bills.
It targets consumers residing near transformers or those 10 poles away, who will be connected using low voltage power lines.
PS in the ministry, Joseph Njoroge of energy has said the continental financier is working on a Sh 13.2 billion ($ 150 million) facility to support the initiative through the last mile connection project(LMCP), that has largely been inclined to provision of subsidy to vulnerable groups.
“Over the last 10 years we had started such a scheme setting connection costs at Sh 35,000 but over the period we realized it was not tenable to work with the average as cost of materials and transport skyrockets,” said Njoroge.
Kenya Power has been charging up to Sh 150,000 for single-phase connections and Sh 350 for a three-phase connection without any form of subsidy.
“Through an amortised power connection systems the costs should come to Sh 20,000 or even below,” said Energy Cabinet secretary, Davis Chirchir.
Already the government expects to receive Sh 70.4 billion from AfDB under the last mile connectivity starting next month.
The funds will be used to connect schools and other social amenities as part of plans to increase connectivity to the grid from 32 percent to 75 percent by 2017.
President Uhuru Kenyatta on Friday commissioned 140MW of geothermal power in Olkaria IV, the biggest geothermal power plant in the world that will retire 600MW of diesel and thermal power that is expensive.
A reduction in reliance on diesel will significantly lower fuel levy costs on electricity bills from current 4 cents/KWh to 2 cents/KWh.
This is projected to save consumers 40 percent in cost of power this month and up to 50 percent by early next year after commissioning of another 140MW of geothermal in December.
Cost of production for manufacturers will significantly go down an effect that should be passed on by food processors to ensure cost of goods also come down.
“Its significant to make the country a cost effective destination to woo more investors and help the government boost income from the sector for other social development projects,” said Chirchir.