Kenya cuts cost of power connections to boost economy

(Reuters) — Kenya reduced the cost of connecting houses to the electricity grid by 57 percent on Wednesday to double the share of the population with electricity to 70 percent by 2017.

East Africa's largest economy is struggling with ageing energy infrastructure and the government has said it plans to expand its generation capacity by 5,000 megawatts (MW) by 2017 from about 2,152 MW now, to lower tariffs and cut costs of doing business and increase the number of electricity users.

Authorities see increased investment in its energy sector as a way of boosting the economy, allowing more people to run small businesses such as welding shops.

President Uhuru Kenyatta said households would pay just 15,000 shillings ($153) for connection, down from 35,000 shillings ($1 = 98.3000 Kenyan shillings) with those who cannot afford even the new rate having the option of paying by instalments.

"This will translate to more productivity and create more jobs," Kenyatta said in a statement.

Kenya Power, the country's sole electricity distributor, has also been investing in new transmission networks to include more homes and businesses. The firm serves about 2.8-million customers out of a population of 40-million.

Kenya relies heavily on renewable energy such as hydro power and geothermal for its electricity.