This archive report was first published on 22 August 2019.
On August 22, 2019, the government introduced the Electricity Rebates Initiative, a move aimed at reducing electricity costs for manufacturers and boosting the country's manufacturing sector.
The initiative provides a 30% tax relief on electricity expenses for manufacturers, but only if they increase their energy consumption, capital investment, and sales by 10%.
This move is part of the government's efforts to create a conducive environment for the manufacturing sector to grow, as identified in the Big Four Agenda and Vision 2030.
The Electricity Rebates Initiative is expected to enable firms to produce more for local and export markets, reduce the price of consumer goods, improve the competitiveness of locally made products, and expand local companies.
These efforts are expected to increase the manufacturing sector's contribution to the country's GDP, ultimately achieving the goals of the Big Four Agenda and Vision 2030.
The initiative follows the amendment of section 15 of the Income Tax Act in 2018, which exempted 30% of electricity costs incurred by manufacturers from taxation.
Other initiatives to curb high electricity prices for manufacturers include the Time of Use (TOU) tariff, which encourages manufacturers to use more energy at off-peak times.
Industry savings rose from KSh78.8 million in December 2017 to KSh196.7 million in December 2018, thanks to the TOU tariff, which offered a 50% discount on power used during off-peak hours.
However, the rebates will not apply to manufacturers involved in the generation, transmission, and distribution of electrical energy.
