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Industrialists step up push for lower electricity costs in Kenya
State Department Micro, Small and Medium Enterprises (MSMEs) Principal Secretary Susan Mang’eni with Kenya Association of Manufacturers (KAM) Chief Executive Officer Tobias Alando during the launch of the Manufacturing Priority Agenda (MPA) 2026 at the Radisson Blu Hotel on February 17, 2026.
Manufacturers want the State to cut power prices by at least Sh2.179 per kilowatt-hour (kWh) and stop curtailing supply to businesses, arguing that these factors have affected production by factories.
They are lobbying for lowering of Energy Charge from Sh13.739 to Sh12.622 per kWh and the Fuel Energy Cost Charge from Sh3.47 to Sh1.062 per kWh as they raised concerns over the passing of Kenya Power losses to consumers, and introduction of unclear charges on top of fuel costs.
State Department Micro, Small and Medium Enterprises (MSMEs) Principal Secretary Susan Mang’eni with Kenya Association of Manufacturers (KAM) Chief Executive Officer Tobias Alando during the launch of the Manufacturing Priority Agenda (MPA) 2026 at the Radisson Blu Hotel on February 17, 2026.
The Energy Charge is based on the average cost of electricity generation in the country, including losses and Kenya Power margins, and is often passed over to consumers. The Fuel Energy Cost Charge is based on the cost of fuel used by thermal power plants.
The Kenya Association of Manufacturers (KAM) accuses Kenya Power of passing over losses related to electricity sold to consumers but not paid for, while on the other hand, costs unrelated to fuel used for power generation are being passed to customers as fuel energy cost charge.
“Commercial losses should not be borne by the consumer as it is energy sold and therefore the responsibility of the utility to collect. In addition, fuel energy charge is a pass-through cost and should not be loaded with any other margin not related to fuel used,” KAM said.
The association says removing margins loaded by Kenya Power on the fuel energy charge alone will reduce its cost by Sh1.71 per kWh.
KAM also accused the State of curtailing power supply to businesses during off-peak hours, locking out many manufacturers who want to produce under the subsidised rates, during time of use tariff.
It said a total of 812 gigawatt-hour (GWh) of electricity generated in the year to June 2024 was not supplied to consumers, a factor it reckons should inform the government’s decision to add the number of businesses benefitting from the ToU tariff.
Under ToU, businesses that produce during off-peak times such as night hours, weekends and public holidays pay a subsidized rate, to encourage actualisation of a 24-hour economy.
The association, which yesterday launched its 2026 Manufacturing Priority Agenda, blames the State for setting tough measures to include businesses benefitting from the ToU tariffs.
KAM plans to use a document launched during the event to lobby the government to implement policy changes across different areas, mainly stable tax and policy environments.
KAM chief executive officer Tobias Alando also indicated that the association will be lobbying the government to stop taxing raw materials, which is making Kenyan businesses uncompetitive in the region.
“We have also raised issues about taxation of raw materials. And we are submitting our proposals to the National Treasury to ensure that the raw materials that we use for processing are not taxed,” Mr Alando said.
KAM notes that Kenyan firms have been finding it hard to compete against regional countries such as Tanzanian companies, which access raw materials duty-free from the Southern African Development Coordination Conference (SADCC) offering them cost advantage.
