MPs approve Bill aimed at lowering electricity costs in Kenya
According to the provisions of the Bill, eliminating excise duty on these parts is expected to attract more investment in the power sector, enabling KPLC to increase the number of transformers in its network.
Kenyans could soon pay less for electricity after the National Assembly approved the Excise Duty (Amendment) Bill, 2025 (National Assembly Bill No. 7 of 2025), which seeks to scrap excise duty on imported components used in assembling electric transformers.
The Bill, which now awaits presidential assent, proposes amendments to the Excise Duty Act aimed at lowering the cost of electricity by reducing the burden on investors in the energy sector.
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“The principal object of this Bill is to amend the Excise Duty Act to remove excise duty on imported fully assembled electric transformers.
This excise duty was imposed in the Tax Laws (Amendment) Bill, 2024, to support local assemblers. However, the amendment has hurt the manufacture and supply of transformers by increasing the cost of importing parts,” reads the Bill.
“It is intended that this amendment will reduce the cost of electricity and enhance power connectivity through additional manufacture and supply of transformers to the Kenya Power and Lighting Company.”
According to the provisions of the Bill, eliminating excise duty on these parts is expected to attract more investment in the power sector, enabling the Kenya Power and Lighting Company (KPLC) to increase the number of transformers in its network. This would subsequently enhance power distribution across the country.
The move comes just weeks after the National Assembly Speaker Moses Wetang’ula directed the House Business Committee to fast-track the Excise Duty (Amendment) Bill, alongside the Value Added Tax (Amendment) Bill, 2025, as Parliament resumed sittings from a short recess on April 1.
In a communication to the House dated March 26, 2025, Wetang’ula said, “The Excise Duty (Amendment) Bill, 2025, is ripe for consideration and has been deemed a priority. It has accordingly been referred to the Departmental Committee on Finance and National Planning.”
Majority Leader Kimani Ichung’wah, the sponsor of the Bill, said the legislative amendments will not only “promote clarity and predictability in the tax regime but also spur much-needed investment in manufacturing and energy distribution.”
The Value Added Tax (Amendment) Bill, 2025, which was published on March 13, seeks to clarify the effective date of tax exemptions granted before January 1, 2024, on capital goods worth at least Sh2 billion for investments in manufacturing.
Wetang’ula said the VAT Bill will bring certainty for investors by eliminating ambiguity in the interpretation of tax exemptions. It is also under consideration by the Departmental Committee on Finance and National Planning.
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