President William Ruto assented to the Excise Duty (Amendment) Bill, 2025 at the State House on April 17, 2025/PCS
Electricity connection costs are set to drop drastically after President William Ruto assented to the to the Excise Duty (Amendment) Bill, 2025.
The Bill amends the Excise Duty Act, CAP 472, to remove the 25 per cent duty on imported fully assembled electricity transformers and their parts.
“This measure is expected to lower electricity connection costs for consumers by reducing the price of transformers, as every connection relies on transformer infrastructure,” a statement from State House reads.
State House said the new law will also help bring down electricity tariffs by cutting transformer replacement costs.
“Additionally, it will enable the Kenya Power and Lighting Company to procure adequate transformers within its current budget, supporting a consistent power supply and minimising disruptions.”
The National Assembly passed the Excise Duty (Amendment) Bill, 2025, which will see the scrapping of excise duty on select imported products.
Excise duty on transformers was initially imposed under the Tax Laws (Amendment) Act, 2024, to promote the local assembly of the crucial item for power distribution.
This, however, did not work out as the government expected, as the 25 per cent duty slapped on imported transformers led to heightened costs for importing essential components and subsequently affected transformer manufacturing.
The new law now makes it cheaper for companies investing in the electricity sector to import essential equipment like transformers.
The removal of the tax could also see the government lower operational costs for players in the electricity sector, enabling them to manufacture and supply more transformers.
Kenya has been actively increasing electricity connections, particularly through the Last Mile Connectivity Project.
The "Last Mile Connectivity Project" is aimed at connecting households and businesses in remote areas to the national grid, particularly in rural areas. This project involves extending the low-voltage network to reach homes within a certain distance of a transformer.
Kenya increased power connection to homes by over 774, 000 consumers from 8,919,584 homes in 2022 to 9,693,954 in 2024 homes while power generation increased by over 240 megawatts from 3076 Megawatts in 2022 to 3243 megawatts in 2024 representing 5.4 per cent increase.
