Manufacturing sector gets a shot in the arm

The manufacturing sector has gotten a huge boost in terms of costs as the government decided to reduce the power tariffs from Sh12 to Sh9 per kilowatt-hour.

The power tariff reduction is expected to cause a change that will see locally manufactured goods become cheaper.

The reduction came after the President chaired a meeting between the private sector and the government at the State House in Nairobi. In doing so the government challenged the sector to work towards increasing its production so that in turn it increases its contribution to the GDP by 15% by the year 2022.

In addition, the Cabinet Secretary (CS) of Energy, Charles Keter said that the government had decided to stop issuing licenses to new thermal power plants as well as stop renewing licenses of those whose contracts had come to an end. The move is expected to assist in bringing down the cost of power in the country.

“Ample power generating projects are being completed in the course of this year that would be producing enough electricity to replace what is currently produced by the thermal producers,” said Mr. Keter.

In order to plug this gap left by the exiting thermal power producers, the government plans to put 310 MW from Turkana wind plant, 400 MW of hydropower from Ethiopia and 55 MW from Garissa solar plant on the national grid.

“All that will displace the thermal power plant because there is no need to say we are giving you power at 9 cents but that power does not last,” said the CS.

However, despite the pronouncement, thermal power companies have long-term contracts with Kenya Power, that guarantee their pay whether they sell electricity to Kenya Power or not.

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