By Faith Jemosop writer at Africa Digest News.
The Kenyan government has scrapped a 25% excise duty on imported electric transformers and their parts, a move anticipated to reduce power connection fees for households across the country. This decision aims to alleviate the financial burden on consumers and accelerate the nation’s electrification efforts.
In late 2024, the government introduced a 25% excise duty on imported fully assembled electric transformers and their components, intending to promote local assembly and manufacturing. However, this tax inadvertently increased the cost of transformers, essential equipment for power distribution, thereby raising the overall expenses for electricity connections.
Kenya Power, the country’s sole electricity distributor, faced challenges in procuring transformers due to the heightened costs, leading to delays in expanding the national grid and connecting new customers.
Recognizing the adverse effects of the excise duty, the government introduced the Excise Duty (Amendment) Bill, 2025, to remove the 25% tax on imported transformers and their parts.
The bill, sponsored by Kikuyu MP Kimani Ichung’wah, acknowledges that the initial tax policy had unintended consequences, including increased costs for transformer assembly and a slowdown in the supply of transformers to Kenya Power.
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The repeal of the tax is expected to reduce the cost of importing transformers, thereby lowering the expenses associated with electricity connections for households. This move aligns with the government’s broader objective of enhancing power connectivity and making electricity more affordable for Kenyan citizens.
The removal of the transformer tax is anticipated to positively influence the Last Mile Connectivity Project, a government initiative aimed at expanding electricity access to underserved areas.
Under this program, households located within 600 meters of a transformer have been paying a subsidized connection fee of KSh15,000, significantly lower than the market rate of approximately KSh71,000.
With the anticipated reduction in transformer costs, the government aims to maintain or potentially lower the subsidized connection fee, thereby enabling more households to afford electricity connections. This development is particularly significant for rural communities, where access to electricity has been limited due to high connection costs.
The government’s decision to eliminate the transformer tax complements other initiatives aimed at expanding electricity access. President William Ruto previously announced a waiver of the KSh70,000 connection fee for new customers, emphasizing the need to optimize the use of existing transformers and ensure that more households benefit from the national grid.
Kenya Power has been implementing strategies to facilitate electricity connections without requiring upfront payments.
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Under the Last Mile Connectivity Project, the utility company allows customers to pay the connection fee over a period of three to five years, easing the financial burden on households and encouraging more people to seek electricity connections .
