Powering prices: Kenya's electricity costs drop by 0.5%

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Electricity prices remained largely stable in South Africa, Nigeria and Egypt in June. However, Kenya saw a slight 0.5% decrease for both residential and commercial consumers. Fossil fuel prices showed more variation, with South Africa's petrol price increasing by R1.58 and Nigerian petrol prices declining by about 10 naira, helped by a stronger local currency.

• Renewables Rising tracks power price fluctuations in local currencies across four representative countries: Kenya, South Africa, Egypt and Nigeria. The data is collected from public sources every month.

• Of the countries we monitored, Egypt’s power prices in both electricity and fuel stagnated in June after a hike in May as the government cut down on fuel subsidies.

More details

• South Africa's petrol price increase might be driven by rising global petrol prices amid strong seasonal demand and a weaker Rand, which made imports more expensive. Conversely, diesel prices fell by R0.44 per litre, probably due to a global surplus of diesel and lower international diesel prices. 

• Kenya’s drop in electricity prices is due to improved hydrology, which boosted hydropower generation and reduced reliance on more expensive thermal plants. This shift led to a lower Fuel Cost Charge (FCC), directly benefiting consumers. With the rainy season ongoing, hydropower output is expected to remain high, suggesting further price relief. Currency stability has also contributed, as a stronger shilling reduces the impact of foreign exchange adjustments on power costs.

• Nigeria's fuel prices saw a slight decline as the Dangote refinery stabilised its operations. This trend is expected to continue into July, driven by broader market shifts and a stronger naira. In Egypt, electricity and fuel costs stayed constant due to long-standing government subsidies. However, these subsidies are being gradually removed and are anticipated to end by the close of the year, which could lead to future price changes.

• The general fuel price in Africa remains shaky, with governments frequently eyeing it as a source of revenue. This week, Ghana announced a new levy of 1 Ghanaian Cedi per litre on refined petroleum products to fund the purchase of fuel for electricity generation. It aims to raise $1.2 billion annually.

• In a broader sense of the market, we expect a price shift soon. Saudi Arabia has called on OPEC+ to boost oil output by at least 411,000 barrels per day in August, with a potential repeat in September, raising concerns over a possible oversupply and subsequent price decline. This might influence fuel prices across Africa in the coming months.

Our take

• What’s Next? With the rainy season ongoing in Kenya, hydropower generation is likely to remain strong, supporting further electricity price drops in the near term. Currency stability will also play a key role in keeping energy costs in check.

• In South Africa, the interplay between global oil prices, the Rand’s strength, and fiscal policy will continue to drive fuel price movements. No new refineries are expected to significantly alter the landscape in the short term.

• The Nigerian market has shown signs of stability after the Dangote refinery began operations, and with the naira appreciating, this is expected to affect pricing at least until July, potentially leading to a decrease or stabilisation of fuel prices.