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Steel industry alarmed by high electricity costs

Kenya’s steel manufacturing industry has complained that the high cost of power and fluctuating electricity costs are having a negative impact on the industry.

Charges of approximately $.026 per kilowatt-hour for March and June were said to be due to unstable international crude oil prices. This pushed the prices of the large steel manufacturers to between $30 000 and $90 500 compared to $45 000 for their Ugandan counterparts, said the Kenya Association of Manufacturers.

The metal products sector showed a 10.2% growth during 2006, but there is a fear that the high electricity prices may slow this growth down. Within the Common Markets for Eastern and Southern Africa community (Comesa), metal and steel products are the largest export sector, with the Kenyan industry producing 122,000 metric tonnes, with a value of $60 million, every year.

Manga Mugwe, the Chairman of Morris and Company Ltd, a steel and metal manufacturer said in an interview with the Business Daily newspaper “The truth is that the cost of power cannot come down if the government does not subsidize electricity cost”

He went further and suggested that the government should look at other sources of power, saying “The government should source power from cheaper sources such as Southern Sudan which is preparing to produce between 2000 and 5000 MW annually from River Nile."

Large consumers of electricity have been asked to switch their production schedules to night shifts as a way of shifting the load and avoiding black outs.

However, Mr Mugwe says night shifts tend to be the most inefficient, adding "Night shifts will bring inefficiency in production since in case of a breakdown of a machine it would not be easy to have it fixed as most technicians are off duty during such hours”.