The Treasury Cabinet Secretary, Njuguna Ndung’u,, recently proposed measures to alleviate the burden of high electricity costs amid the country’s escalating cost of living. Addressing the Energy Committee, headed by Mwala MP Vincent Musyoka.
Ndung’u recommended a comprehensive review of levies associated with token purchases, identifying key charges such as the Water Resource Management Authority (WARMA) Levy, the Energy Regulatory Commission (ERC) Levy, and the Rural Electrification Program (REP) Levy.
While acknowledging the concerns raised by some members of the Energy Committee regarding the tax burden and levies affecting overall power costs, Ndung’u highlighted the logistical complexities of reducing the 16% Value Added Tax (VAT) on electricity. He emphasized that eliminating this tax could potentially disrupt the equilibrium of the VAT tax structure.
In view of promoting a conducive investment environment, Ndung’u explained the importance of revising these levies, with the expectation that reduced electricity costs would attract both local and foreign investors. Presently, a Ksh200 token purchase involves a Ksh24 VAT charge, a Ksh6.23 REP Levy, and a Ksh0.1 WARMA Levy.
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Moreover, the Treasury Cabinet Secretary emphasized the urgency of addressing power outages to enhance Kenya’s appeal to investors. Anticipating forthcoming developments, the Energy Committee is set to submit a comprehensive report to Parliament in the following weeks, outlining recommendations for mitigating the escalating costs of power.