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Electricity prices to increase by 15 percent on 1st, January 2023

Electricity prices to increase by 15 percent on 1st, January 2023 as Ruto’s government plans to stop the subsidy.

As a result of President William Ruto’s decision to not prolong a multibillion-shilling subsidy started by his predecessor, Uhuru Kenyatta, Kenyans will start paying 15% more for power as of this Sunday.

Director-General of the Energy and Petroleum Regulatory Authority (EPRA), Daniel Kiptoo, announced that the 15% discount would not be extended past its deadline of December 31. 

This will result in expensive electricity and further pressure on the already-high inflation rate.

“When the new government came in, it withdrew the support (subsidy) in August, and thus after the end of December, we will revert to the rates that were in place before January,” Mr. Kiptoo said

President Ruto has been against subsidies imposed by Uhuru Kenyatta on petrol and staple maize food, terming them unsustainable.

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The subsidy, whose cost will hit Sh26 billion, was meant to ease the cost of living crisis and boost economic growth by making energy costs competitive.

The 15 percent cut implemented in January saw the cost of buying 200 per kilowatt hour (kWh) of electricity a month drop from Sh5,185 in December to Sh4,373 in January.

Those consuming 50 units a month and who are subsidized by the State saw the cost drop to Sh796 in January from Sh945 in December, representing a 15.7 percent decline. 

But the 15 percent discount has since been wiped out by the increase in the foreign exchange and fuel adjustment surcharges on electricity bills.

The increase in electricity prices will unleash pricing pressure across the economy as producers of services and goods factor in the higher cost of energy.

This will be a blow to consumers who are also grappling with historically high prices for fuel and food amid the worst drought in 40 years.

Inflation eased by 9.4 percent last month after the drought drove up food prices and higher energy costs.

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