High energy costs discouraging foreign direct investment, says top industrialisation official

By Today Financial News Reporter

Inadequate and costly energy in the country cannot attract and sustain major foreign investments and especially in the manufacturing sector that rely on reliable and affordable power.Industrialisation minister Amason Kingi says inadequate and expensive energy is not attractive to investors in the manufacturing sector

Industrialisation Permanent Secretary Eng Karanja Kibicho says the current energy produced in the country is not sufficient enough to meet the requirement of the industrial sector that consume about 70 to 80 per cent of the energy produced.

He says even though the capacity of energy expanded by 7.7 per cent up from 1,311.5MW in 2009 to 1,412.2MW in 2010, the rate is still too low a situation that has discouraged some manufacturers from expanding their operations.

“The energy generated is not sufficient to drive industries and neither can it attract investors. This likely scenario impacts negatively on manufacturing activities and in turn slows down the overall economic growth rate,” says Eng Kibicho.

Industrialization minister Mr Amason Kingi says high cost of energy has had a major impact on cost of production of goods thereby determining the productivity and competitiveness of the local products.

He says industries in the region are still lagging behind and loosing to their global competitors due to the high cost of doing business characterized by inadequate power that is both expensive power and unreliable.

Energy minister Kiraitu Murungi has on many occasions lamented over low budgetary allocation to the sector a situation that has led to the failure to complete pending energy projects.

Among the projects earmarked is the 300 MW coal plant at the coast by the Kenya Electricity Generating Company.

Kingi says his ministry has developed a national industrialization policy that has identified 22 sub-sectors that will drive the industry that has been identified as one of the major economic pillars in the Vision 2030 economic and development blueprint.