When the government lowered the cost of power in January this year, we wondered how it would be achieved without bankrupting Kenya Power. The reduced charges meant that the energy distributor was selling power at a loss to some of its customers.
It is now official that the cut in power prices is as a result of a government subsidy – the company has been allocated Sh7bn in addition to Sh9bn allocated in February. The move, it appears, intends to reward theft and inefficiency.
I have on many occasions demonstrated how the cost of power can be lowered to below Sh12 per unit. This goal would be achieved by scrapping the Sh4.63 fuel cost charged per unit of electricity. This would be realised by replacing expensive diesel power with cheaper geothermal power. Instead of spending Sh16bn on subsidy, why not allocate the amount to Kenya Electricity Generating Company (KenGen) and Geothermal Development Company (GDC) to complete the power projects such as the 140 MW Olkaria VI and the 170 MW Menengai power project?
The Menengai project has stalled for eight years due to lack of finances. Completion of these projects would not only eliminate thermal power but also leave spare capacity for future growth in power demand.
Subsidising Kenya Power is a stupid move however politically convenient. It amounts to subsidising theft by Independent Power Producers (IPPs). It also subsidises inefficiencies and graft at the utility firm. Why does Parliament allocate money for such wasteful projects?
These subsidies are going to destroy the economy. This is borrowed money we are wasting. The subsidies create an addiction and dependency which will be hard to end. Look at how Nigeria has struggled with fuel subsidies.
Ephraim Njenga, Via Facebook
