Electricity cost to hit new high in January 2023 as subsidy is dropped

By , K24 Digital
On Fri, 30 Dec, 2022 14:32 | 2 mins read
Electricity cost to hit new high in January 2023 as subsidy is dropped
A prepaid electricity meter used for illustration. PHOTO/Courtesy.

Consumers will be hit by an electricity price shock in January 2023 as the subsidy which retired president Uhuru Kenyatta initiated is dropped.

Energy and Petroleum Regulatory Authority (EPRA) director-general Daniel Kiptoo said the 15 per cent discount would not be extended beyond its expiry date of December 31, 2022.

“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,” Kiptoo was quoted by Business Daily.

President William Ruto has been against subsidies imposed by his predecessor on items like petrol and maize which were meant to ease the cost of living crisis and boost economic growth.

However, Ruto eliminated subsidies terming them unsustainable.

In his inaugural speech on Tuesday, September 13, 2022, Ruto announced that his administration would do away with the fuel subsidy programme, that had kept fuel prices at manageable levels.

Ruto revealed that the government had used at least Ksh144 billion in the last financial year, Ksh60 billion being in the last four months of Uhuru's administration.

"If the subsidy continues to the end of the financial year, it will cost the taxpayer Ksh280 billion, equivalent to the entire national government development budget. Additionally, there was an attempt to subsidize Unga in the run-up to the election, a program that gobbled up Ksh 7 billion in one month, with no impact. In addition to being very costly, consumption subsidy interventions are prone to abuse, they distort markets and create uncertainty, including artificial shortages of the very products being subsidized," Ruto said.

The price of a litre of super petrol, diesel and kerosene increased by Ksh20.18 per litre, Ksh25.00 per litre and Ksh20.00 per litre respectively in September when the fuel subsidy was removed.

Public Service Vehicle (PSV) operators immediately increased fare prices after the government removed fuel subsidy causing a sharp rise in pump prices.

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