Somaliland cuts electricity tariffs to ease energy costs

Somaliland’s Ministry of Energy and Minerals announced on Thursday that the national electricity tariff will be reduced from $0.73 to $0.59 per kilowatt-hour, effective December 1, in an effort to ease power costs.

Energy Minister Ahmed Jama Barre said in a statement that the move followed a directive from President Abdirahman Abdillahi Irro and a cabinet resolution granting power companies, water agencies, and industrial producers access to subsidized fuel.

The ministry explained that the previous tariff, set in June 2022, included a temporary increase of $0.10 per unit, attributed to surging global fuel prices at the time. The new rate will apply cities across Somaliland, except in Berbera, which operates under an independent pricing structure.

This is not the first time the Somaliland government has intervened in the electricity market. Over the past decade, similar directives have been issued multiple times, usually in response to public discontent or rising living costs. Such measures are typically framed as consumer protection initiatives, aiming to relieve financial pressure on citizens amid recurring economic shocks.

However, the effectiveness of these interventions has been limited. Private electricity providers continue to dominate the market and often raise rates during crises — such as the COVID-19 pandemic and the onset of the Russia–Ukraine conflict, when fuel prices surged — but rarely reduce them once conditions stabilize. Observers note that this pattern reflects weak regulatory oversight and the government’s limited capacity to enforce lasting price controls.

Moreover, allegations of price fixing and anti-competitive practices have long shadowed Somaliland’s energy sector. Consumer accuse some firms of coordinating to keep electricity prices artificially high, a practice that disproportionately affects low-income families and small businesses.

Electricity in Somaliland remains among the most expensive in the Horn of Africa. As of March 2025, Ethiopia’s average residential electricity price was approximately $0.005 per kWh, while Kenya’s stood at about $0.22 per kWh. By comparison, even after the recent price reduction, Somaliland’s rate of $0.59 per kWh remains exceptionally high.

While the government’s recent directive offers a glimmer of relief for consumers burdened by soaring energy costs, its long-term sustainability remains uncertain. The private sector’s dominant control over electricity pricing continues to shape market dynamics, often undermining government efforts to regulate costs. Without robust enforcement mechanisms and transparent market practices, Somaliland’s electricity sector risks remaining vulnerable to the very forces this policy aims to restrain, leaving affordability an elusive goal for many low-income households and small businesses