Kenya has revoked the special electricity tariff for industries operating in the Olkaria-Kedong Special Economic Zone (SEZ) in Naivasha, in a move that could dampen investment in one of the first SEZs in the country.
- •In a gazette notice, the Energy and Petroleum Regulatory Authority (EPRA) revoked the KSh 5 per kWh tariff that was introduced as a pilot scheme in 2020.
- •The tariff was lower than the standard industrial rate, and just half the KSh 10 per unit at other SEZs and for large industries.
- •The Olkaria-Kedong SEZ was designed to lower production costs for industries while promoting Kenya as a competitive manufacturing destination.
The SEZ‘s special rate was an experiment to assess the impact of electricity prices on attracting investments.
Part of the rationale for the low power tariff for the Olkaria-Kedong SEZ was its close proximity to the geothermal power fields, which reduced the cost of electricity transmission significantly. Its proximity to the Standard Gauge Railway (SGR) was also touted as a major advantage for large industries because it would ease transport and logistics of raw materials and finished products.
In 2023, EPRA set a uniform rate of KSh 10.00 per kWh for all units consumed, with an Off-Peak Energy Charge of KSh 7.42 per kWh for electricity used.
The revocation will lead to higher higher power bills for businesses in the zone, potentially impacting production costs and investment decisions.
