Treasury Cabinet Secretary Njuguna Ndung’u has suggested ways to alleviate high electricity costs amid the increasing cost of living. Speaking before the Energy Committee, he emphasized the need to review several levies deducted during token purchases.
During his appearance before the committee chaired by Mwala MP Vincent Musyoka, Ndung’u pointed out the Water Resource Management Authority (WARMA) Levy, the Energy Regulatory Commission (ERC) Levy, and the Rural Electrification Program (REP) Levy.
These levies are typically imposed to support various government programs, such as rural electrification and more. However, he maintained that the proposed reduction of the 16% Value Added Tax (VAT) on electricity would not be feasible.
Ndung’u clarified, “The only national tax charged on electricity is VAT at the rate of 16%, and removing it would introduce discrimination in the VAT tax regime.”
He added that revising these levies could potentially lead to lower electricity costs for Kenyan consumers and make the country more attractive to investors. This move comes in light of Tanzania’s emergence as a leading investment destination in the region.
Currently, out of a Sh200 token purchase, Sh24 is allocated to VAT, Sh6.23 to the Rural Electrification Program (REP) Levy, and Sh0.1 to the Water Resource Management Authority (WARMA) Levy.
The Treasury CS also highlighted the necessity of addressing power outages to further enhance Kenya’s appeal to potential investors.
Members of Parliament (MPs) are expected to present a comprehensive report on the CS’s recommendations in the following weeks, detailing potential strategies to reduce electricity costs.
Subsequently, legislators will deliberate on the report and endorse various recommendations for government consideration and implementation.