Nairobi — The Kenya Association of Manufacturers (Kam) has welcomed President Kibaki's intervention to end the energy crisis threatening to cripple the economy.

"The fact that the President decided to step in shows his commitment to alleviating the suffering of Kenyans while ensuring that the country remains competitive in the global market," it said in a statement.

Shot in arm

The directive to remove Value Added Tax on bulk fuel used for power generation, it said, is a shot in the arm especially for the manufacturing sector, which is considered the engine of Kenya's economic growth.

"The fact that this directive will result in a reduction in electricity costs by a great percentage is a major plus for the manufacturing sector which is reeling from the effects of high energy costs," said Kam chief executive office, Ms Betty Maina.

The association urged the Kenya Power and Lighting Company and KenGen to heed the President's directive and immediately pass on the benefits to consumers.

If the directive is implemented, Kam said, looming job losses, business closures and relocation and loss of investor confidence will be averted.

Job losses

According to a Kam survey, about 80,000 people were set to lose their jobs as a result of the increased cost of doing business in Kenya because of steep electricity charges.

If the crisis persisted, Kenya would turn into a trading country, it added.

"Power is a critical factor if Kenya is to attain the anticipated Vision 2030, whose realisation still remains a pipedream given the myriad impediments to the development of businesses locally," Ms Maina said.

The association also called for increased power generation in the country to meet the growing needs of Kenyans.

"The best way to do this would be through geothermal power generation which has the capacity of generating huge amounts. Individuals should also be allowed to establish their own plants.

Allow people

"This energy crisis is affecting all Kenyans and calls for a radical change in policy to allow people to generate their own electricity. This will see a major increase in the amount of power that is generated locally," said Ms Maina.

Kam said electricity costs more in Kenya than in Uganda, Tanzania, South Africa and Egypt, making Kenyan commodities less competitive in both the regional and international markets.