Kenya will next month cut power tariffs by up to a third for large businesses and manufacturers that shift their operations to late night hours.
The Energy Regulatory Commission (ERC) said it would from December 1 offer discounted tariffs for commercial and industrial power users who operate from 11pm to 5am, a window within which demand is low.
The energy charge billed by Kenya Power for commercial consumers metered at above 11 kilovolts (kV) will decrease by a third to Sh5 per kilowatt hour (kWh) from Sh7.50 per unit.
Commercial users who are metered at between 450 volts to 11 kilovolts will pay Sh7 per unit from Sh9.20.
The energy regulator expects industrialists to pass the benefits of lower costs on to consumers in form of cheaper commodities.
The plan, which has been on the cards for a decade, was arrived at on Monday after ministry officials met Kenya Association of Manufacturers and Kenya Private Sector Alliance.
“The introduction of the night tariffs will help promote commercial and industrial growth in Kenya while maximising on the surplus energy available at off-peak hours,” said ERC acting director-general Pavel Oimeke.
It comes when the country is moving to add 300 megawatts from the Lake Turkana wind power project, which is complete but delays to construct a transmission line have hampered efforts to connect the power to the national grid.
The ERC, however, said the discount offered to manufacturers ought not to eat into the margins of Kenya Power, hence the pilot launch to determine its viability.
The shift by manufacturers to night-time production is expected to ease demand pressure during peak hours, which often force Kenya Power to switch on the expensive diesel generators to stabilise the supply.
Kenya consumes less than half the peak power demand (currently 1,727 megawatts) between midnight and 5am.
The peak time stretches from 9am and climaxes at between 6pm and 9pm when Kenyans return home from work switching on house lighting, cooking appliances and TVs.
Shifting industrial production to night shift is one of the several options the State is pursuing to lower the cost of production that will ultimately cut the cost of consumer goods and make Kenyan products competitive in the global market.
The night tariff had been introduced in 1999/2000 but squeezed Kenya Power’s margins since all large consumers shifted to the off-peak times with the electricity distributor incurring heavy losses and had to be abandoned.