Kenya's manufacturing sector faces a grim future as a result of the escalating electricity costs in the country.

Consequently, many industries are likely to close and/or relocate to countries with lower production costs of which electricity is a major factor input.

Last week Kenya Association of Manufacturers called on the government to make quick interventions to save the productive sectors of the economy from the negative effects of escalating electricity prices.

Speaking during a press conference today, KAM Chairman Vimal Shah sounded an alarm over the high cost of electricity in the country, saying prices had increased by approximately 600 per cent over the last one year.

He said Kenyan manufacturers were paying between Sh10 and Sh15 per kilowatt of electricity; while their competitors in China and India pay the equivalent of between Sh 2.50 and Sh 3.80 per kilowatt of electricity. This makes their products much cheaper than Kenya's.

"With these exorbitant rates, Kenyan industries are now faced with the grim reality of business closures and possible relocations to more competitive countries from where they will produce and export to Kenya," said Vimal.

Kenya's products are increasingly finding it difficult to compete with those from other countries especially Asia, because of the variations in the costs of doing business.

Within the Comesa bloc, Kenya's two major competitors Egypt and South Africa pay minimal electricity costs compared to Kenya.

He said the tremendous increases in energy costs in the country over the past few months have negatively affected the cost of doing business across all sectors of the economy, making Kenya's products very uncompetitive in the international market.

"Although high production costs will not stop consumption, consumers will have to choose between buying local products which are more expensive and buying cheaper imported products," he cautioned, adding that if unchecked, the trend of high production cost is likely to turn Kenya into a trading rather than manufacturing country.

Chief Executive Betty Maina warned that estimated 72,000 - 80,000 jobs are likely to be lost due the electricity crisis alone, saying it will further constrain local consumption as purchasing power is lost.

The Federation of Kenya Employers (FKE) expressed concern over jobs that are likely to be lost and the impact on security.

The government, said Vimal, should intervene as soon as possible in order to save the country from the current power cost crunch which is posing a major threat to the country's socio-economic well-being.

"We believe that the government is the only entity that holds the key to this crisis that is affecting all Kenyans," he said.

The director of Alloys Steel Castings Sagoo Tejwany said his factory might be forced to close down within the next one-and-a-half months if nothing is done to curb the current electricity prices.

This, he said, would result in approximately 800 workers losing jobs at the factory.

The chief executive of the Kenya Association of Tour Operators Fred Kaigua warned that the impact of electricity costs on manufacturers will trickle down to the tourism sector because of anticipated rise in commodity prices.

Members have recommended an increase in investment in generating capacity, that government encourages industries to generate for own use and sell excess to the grid, that government demonstrates seriousness and commitment to roll out of programmes for renewable energy.

Others are review of revenue maximization policies, incentivise energy conservation, review of financing models used by the utility companies, review programmes for demand expansion and demonstrate partnership with Business and Society in finding lasting solutions to the power problem.