Written By John Mutiso 📝
Kenya Power is one of the beneficiaries of a Sh86.95 billion State loan tapped from two international lenders in efforts to support the power utility’s turnaround.
According to Treasury documents tabled in Parliament, Kenya requested Sh60.29 billion ($520 million) from the International Development Agency (IDA) and Sh26.667 billion ($230 million) from the International Bank for Reconstruction and Development (IBRD) on March 18.
“The purpose of the loan is to provide financing in support of the program whose actions include electricity sector and PPP reforms to strengthen the cornerstone utility (KPLC),” Treasury says in the documents.
According to the company’s management, the 15% reduction in power tariffs implemented in January will cost it up to Sh26 billion in revenue. The estimate excludes a further 15% cut scheduled to take effect before the end of June.
“The 15 percent power reduction if you look at our last year’s financials, the top line was Sh144 billion, then do 15 percent of this you will end up at Sh25 or Sh26 billion. A 15 percent tariff reduction on the end-user will be in that region,” Kenya Power said in March.
Kenya Power’s turnaround continued, with net income increasing 27.6 times to Sh3.8 billion in the six months ended December from Sh138 million the previous year. The impact of the 15% cut will be reflected in the full-year performance.
Therefore, the company requires funds to upgrade its systems, reduce endless blackouts caused by its aging infrastructure and meet growing customer demand.
Kenya Power gained 317,296 customers in the six months to December, increasing its customer base to 8.59 million from 8.27 million in June of last year.
The State-owned power distributor has been losing billions of shillings in uncollected revenues since the company dispenses electricity before collecting.
Households or domestic power users top the list of defaulters, accounting for approximately 60% of outstanding bills among domestic customers, 20% among SMEs, and 10% among commercial customers.