By Betty Maina

It is so tragic that Kenya keeps going round in circles when it comes to power issues.  Just when all Presidential Candidates have promised Kenyans lower Energy costs, Kenya Power and Lighting Company (KP) is once again knocking on the Energy Regulatory Commission (ERC)’s door with a proposal for power tariff increases. ERC has subsequently sent an invitation to stakeholders advising of a public forum on Monday February 25, 2013 to discuss the same. KPLC has submitted an application for approval to the ERC for electricity energy tariff review to apply across all the consumer category specific tariffs. 

ERC should not grant this review at this time, but should give KPLC some preconditions to meet before a review is considered most of which include fulfilling the promises of 2008. KPLC registers a lot of profits each year from revenue collected from consumers and yet projects to expand capacity are still stagnant.

Without sounding like a broken record industry consumes 60% of the power in Kenya and therefore the increase will disproportionately negatively affect industry and consumers of industrial products  will bear the brunt of the resultant increase.  So are we forever going to be involved in a vicious circle of power increases and price increases?

The same issue of improving global competitiveness of our locally manufactured products always comes to mind when these power increases are mooted. It would be foolhardy to think that when Kenyan products are failing to compete at the current rates there would be any positive change if power tariffs are increased and yet we still continue to shoot ourselves in the foot.

When will it sink in the minds of anyone in authority in this country that the solution to our energy issues is not in the increase in tariffs but in expediting the completion of alternative energy resources as well as promoting more investment into the energy sector?

Like all businesses, Kenya Power’s revenue growth should not come from price increases alone. KP power revenue requirement should come from organic growth in customer numbers and volume of sales and not from increasing electricity energy tariffs.

All the presidential aspirants have promised Kenyans cheaper power. It is not appropriate to consider raises at this point before the eventual winner of the Presidential race is voted in and has time to implement their ideas and proposals that would lead to a decrease in energy costs.

The planned increase would negatively affect Kenya’s competitiveness. With the proposed tariff review to take effect from March 2013 (should KP be successful), at current fuel cost levels, average tariffs would increase by an average 40%. Given the centrality of power in production, which economy can afford 40% adjustments in prices willy nilly?

Already, industrial growth has been affected by the 2008 electricity tariff review. The manufacturing sector grew by a disappointing 3.3% in 2011 compared to 4.4% in 2010. This translates to a decline of 25% in industrial growth which mainly attributable to energy costs and other primary input costs.

If the increases sail through the country has to brace itself for a massive exodus of manufacturing companies to countries that have cheaper energy costs such as Ethiopia, Egypt, Tanzania and Uganda whose electricity costs are USc 3/kw, USc5/kw, USc9/kw  and USc 18.6 respectively compared to Kenya’s current USc18.7/kw.  If KP’s is allowed to increase costs, this shall rise to USc 28. Such a move would result in giant losses of jobs and ultimately increase in poverty levels, slow economic growth and negatively impact one of the goals of Vision 2030 of Kenya becoming an industrialized country.

The arguments presented by KP to support the application are without basis.

The last time electricity energy tariffs were reviewed was in the year 2008. The increase was granted on the understanding  that KPLC wanted to embark on new projects that would result in system efficiency to avoid outage and to reduce  system losses to no more than 15%. The promises of 2008 have not been fulfilled and they are projecting a gloomier picture of an even higher system loss and one wonders whether the power authority is operating in a globalised economy or are sitting on an island in an unknown world where issues of pragmatism and competency in managing resources do not exist.

Of the 13 projects KPLC argued for an adjustment of the tariff for in 2008, only 5 have been fully completed. The rest are all behind schedule. Therefore, additional revenue for the utility will mean there will be redundant capital as it can be noted projects do not come in as projected thus there is no need for paying for future projects now. KPLC needs to use the revenue from previous increase to complete these projects.

 KPLC has gone to satellite reading from the previous way of reading meters by KPLC personnel. The introduction of prepaid metering has reduced the operational costs and helped in reducing bad debts and the utility still hold onto consumer deposits. The increase in fixed charges is thus not justifiable.

The tariff is based on long term marginal cost. From the planned projects, renewable sources of energy are taking up the bulk share both in the long term and short term plan which should translate to lower tariffs due to reduced fuel costs as the thermal power plants will be scaled down in the planned period. KP’s proposal does not take account of this reduction in thermal power in the system.

 In addition, The timing for tariff increase is wrong as the devolution process will take effect this year. Thus this should wait until the new dispensation takes place and the draft energy policy is finalized and gazetted to give guidelines on energy pricing and ownership of the utility services. 

Kshs. 8 billion earmarked for way levies and other levies in the proposal by KPLC to ERC as anticipated payments to local authorities and Kenya Railway are presumptive and should not be factored in the tariff until the policy dictates. This matter should await the outcome of the energy policy currently under review.

For the period 2011-2016, the Non-Fuel Cost charges are increasing as fuel cost component reduces. This is indicative of KPLC trying to maintain the same level of revenues at current rate per unit of energy without passing the benefit of reduced fuel costs to the consumer. Moreover, KPLC does not plan to improve efficiencies in debt collection. KPLC is budgeting for increase in bad debts at the same time asking for a tariff increase!

The bad debt is projected by the company to even increase from Kshs. 1.2 billion in 2013 to Kshs. 1.4 billion in 2014. It is high time KPLC ups its game and desist from increasing power tariffs  in response to its own inefficiencies. There is a limit to what consumers can take and that limit has been passed. The increase is just unacceptable to industry!

The writer is the chief executive of Kenya Association of Manufacturers and can be reached on This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The business community recognises that ethical business brings about good business and is committed to play a proactive role in building a globally competitive and prosperous nation, with high quality of life as envisioned in Vision 2030.

This message came out sturdily as Chief Executive Officers (CEOs) of leading companies and institutions in Kenya gathered on February 5 at a CEO’s breakfast meeting on Business and Ethics jointly hosted by Kenya Association of Manufacturers and Safaricom Ltd under the auspices of the United Nations Global Compact Kenya Network,  to share best practices on how companies have managed to address integrity concerns in their operations.

Globally companies have acknowledged that business ethics are mandatory for the survival of any business. Businesses that do not follow good ethical practices may have short-term success but may fall in the long run.

“Today’s theme ‘Keeping the Momentum’ reminds us of the journey we have taken so far on the subject of ethics in business. Just about a year ago, we launched the Code of Ethics for Business in Kenya which was the product of a series of consultations and technical advice and are glad that many businesses in Kenya  have voluntarily signed up to uphold  good ethics in their establishments,” said KAM Chief Executive Officer, Ms. Betty Maina.

Launched in March 2012, the Code is an initiative by the business community in Kenya aimed at promoting and enhancing the conduct of ethical business. It is a statement of commitment to act responsibly to the various stakeholders that businesses deal with. Inspired by the UN Global Compact Initiative its commitments have been drawn in line with the ten principles on Human Rights, Labour Rights, Environment and Anti-corruption. KAM hosts the Kenyan chapter of the Global Compact and serves as a custodian of the Code of Ethics for Business in Kenya. Safaricom is an active participant in the initiative and a pioneer signatory to the Code of Ethics.

“To date 52 companies have signed up to the Code and we appreciate this achievement. We look forward to a similar number, if not more, also joining this ethical business movement, beginning today, “said Ms. Maina.

Speaking at the forum Safaricom Chief Executive Officer, Mr. Bob Collymore urged companies to engage in social investment in order to protect human rights at the work place. “The core business activity should not have a negative impact on these rights,” he said.

He lauded the companies that are members of the global compact as well as those signed up to the code of ethics and called upon them to take on a more active role both at the local and the regional network.  He challenged the Chief Executives to spearhead ethics initiatives in their companies as a sign of commitment towards this.

Business best practices on ethics management were presented by East African Breweries Ltd, Safaricom Ltd and Edible Oils sub-sector.

In the course of this year, KAM shall organise the Certified Ethics Officer Training, which is a specialized training to enhance the capacity of companies to manage integrity within the organization.

Commissioner Irene Keino, Vice Chairperson of Ethics and Anti Corruption Commission also buttress the need for participation in the fight against corruption. “The active involvement of the business community is a key strategy in the fight against corruption….Hence, close attention and commitment to fighting corruption must come from a wide range of stakeholders. 

For more information please contact Geoffrey Korir on email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

January 9, 2013  NAIROBI: Kenya Association of Manufacturers (KAM) has warned that the manufacturing sector will be poised for slow growth  during the first quarter of this year as investors await the outcome of the

Kenya Association of Manufacturers yesterday engaged with the Chief of Defence Forces (CDF) at a KAM CEOs breakfast held in Nairobi on strategy and general security issues

Keep the spirit of the constitution alive!
October 17, 2012, NAIROBI: Manufacturing moguls have implored all Kenyans to keep the spirit of the constitution alive, Ms Betty Maina, Chief Executive of Kenya Association of Manufacturers has said.

Speaking at a forum  organised by Kenya Private Sector Alliance and Commission for the Implementation of the constitution in Nairobi today, Ms Maina said: “We have a beautiful document in the form of our constitution, the implementation is where we are not up to speed, we do appreciate though some of the effort that is being put in the implementation process.”

Manufacturers also said that the required resources and capacity for counties to carry out functions assigned under the constitution must remain a top priority. “Key among these functions will be public financial management and capable service delivery that delivers the promise of the constitution. Failure to deliver accountable and capable devolved government will negatively affect business and compromise the delivery of a better business environment.  There is therefore need to prepare for phased devolution,” said Ms Maina.

KAM also said that costs of constitutional implementation must be undertaken with due caution and within means. “Of concern to business is especially the cost of constitutional commissions and creation of several commissions with overlapping mandate. The country cannot afford expensive government. It will be unable to deliver and will compromise the promise of the new constitution,” said Ms Maina.

The private sector, led by influential business membership organizations such as KAM, was actively involved in the process leading to the finalization and endorsement of the constitution. KAM boss also said that delays in implementing some bills were also a cause for concern. “Some bills are not yet implemented and this is frustrating the efforts of constitution implementation and this is affecting business operations,” said Ms Maina.

Manufacturing sector also warned that they were concerned about the unavailability of adequate resources for implementing some of the provisions of the constitution. “One of the greatest fears that we have is that government may decide to increase taxes in order to fund implementation of some of the aspects of the constitution and the domino effect is that it will just increase the cost of doing business which on its own comes with a set of ills,” said Ms Maina.

KAM also raised issues of intra trade between counties which is not clear: “KAM is in support of a business friendly legal framework from the counties which will facilitate the smooth flow of goods from one county to another. Manufacturers were also not amused that some Government Ministries were not adequately involving the private sector in the preparation of bills at an early stage such as the recently passed breast milk substitutes bill which manufacturers vehemently opposed as it was not in the interest of improving child nutrition.

“In the spirit of evolving on a new path in the new era of the constitution it is paramount that the industry voice is respected and that all parties involved at any stage of the implementation do so with a clear mind for posterity.” The current constitution ushers a new era for the legislative framework for the country with a myriad of positives such as a guarantee to the right to own property in any part of the country, a fixed size of government and better management of public finance. Manufacturers are pro the expedience of the implementation of the constitution.

KAM was involved in the formulation of the constitution and most of its proposals were incorporated in the current constitution.  “Manufacturers and the business community in general envisaged a marked improvement in the accountability by government and those in power.  If the golden handshake being proposed by the current parliamentarians is anything to go by then as a country we still have a lot to learn in adopting the issues of prudence in implementing the new constitution,” Ms Maina said.

ENDS

ABOUT KAM

KAM represents 700 members in the manufacturing industry and the manufacturers arguably contribute about a quarter of the country’s gross domestic product. Over a million people are employed in the sector and millions others are supported in downstream activities.

The manufacturing sector is the country’s back borne and if this sector is not well supported the country stands to lose a lot of revenue and millions of jobs may also be at stake.

For more information  please contact:

Paida Nyamakanga, Executive Officer, Corporate Communications. Kenya Association of Manufacturers on 0717112767 or email  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Remove-Non-Tariff-Barriers-Businesses-tell-Kikwete

September 12, 2012, NAIROBI: Kenyan businesses have called on  President Jakaya Mrisho Kikwete of Tanzania to remove non tariff barriers that are hindering trade between Kenya and Tanzania in order to create a more conducive trading and investment environment, Mr Polycarp Igathe, KAM chairman has said.

July 13, 2012, NAIROBI:  Manufacturers have welcomed the gains made in the last 10 years at a meeting held today in Nairobi to take stock of achievements during the Kibaki era, former KAM chairman Mr

Teampro in conjunction with Kenya Shippers Council and Kenya Association of Manufacturers is organizing a trade and investment mission from Kenya to the Netherlands. This mission is supported by The Dutch Government through its agency, NL EVD International, under the Ministry of

Kenya Association of Manufacturers (KAM) made a re-entry into the Zimbabwe market through a highly successful Trade and Investment mission on November 9 – 11, 2011, conducted at the country’s capital, Harare. The high level mission was led by KAM Chairman Mr. Jaswinder Bedi, and

The Private sector has been asked to consider venturing into the numerous opportunities that are available to partner with the Government towards the delivery and realisation of the much anticipated Vision 2030.