HIGH POWER BILLS

Kenya Power declared a special government project amid high bills

CS Fred Matiang’i chaired a meeting with Kenya Power management before making the announcement.

In Summary

• The power supplier will also review existing agreements to be prioritised in a bid to lower cost of electricity in the country.

• He said implementation of the recommendations of the Task Force on Kenya Power will be undertaken immediately.

Interior CS Fred Matiangi during a previous press briefing.
Interior CS Fred Matiangi during a previous press briefing.
Image: FILE

The Kenya Power and Lighting Company has been declared a special government project.

This will see a an inter-ministerial team set up to audit it and oversight urgent reforms immediately.

Meanwhile, a multi-agency team comprising the Directorate of Criminal Investigations, Financial Reporting Center, Assets Recovery Authority and other investigative agencies will be assembled to investigate alarming system losses.

The team will also audit procurement practices, insider trading, conflict of interest and suspect transactions involving Kenya Power staff and others.

Interior CS Fred Matiang’i chaired a meeting with Kenya Power management and staff before making the announcement.

“Our bills are unsustainable as they are today. We cannot continue this way,” said Matiang'i.

In attendance were PSs Gordon Kihalangwa (Energy) and Julius Muia (Treasury), Kenya Power board chairperson Vivian Yeda and acting managing director Rosemary Oduor.

“We are going to do a forensic audit of some of our systems and procedures. We are working jointly at an inter-ministerial level to reduce the system losses including the theft of power. We will address all challenges that result in passing unnecessary costs to consumers,” Matiang'i said.

Matiang’i said Kenya Power had been ordered to immediately suspend ongoing and pending negotiations with independent power producers.

The power supplier will also review existing agreements to be prioritised in a bid to lower cost of electricity in the country.

He said implementation of the recommendations of the Task Force on Kenya Power will be undertaken immediately.

“The government has ordered review of existing PPAs to be prioritised in a bid to lower cost of electricity procured by Kenya Power and therefore the unit cost of electricity billed to clients thereby lowering cost of electricity to Kenyans,” he said.

Matiang’i, said the decision was in line with the recommendations of the Presidential Task Force on the Review of PPAs entered into by KPLC following widespread concerns of high electricity bills.

He added a meeting of all state agencies in the energy sector will be convened urgently to synergize and align the country’s demand-vs-supply needs of the country and to work out modalities of bringing down energy costs.

The move to call in multi-agency teams to investigate activities at the agency comes even as the DCI is still on the meter and billing system which has been blamed on the exorbitant bills. 

After the meeting, Matiang’i assured lower fuel prices in the next maximum pump price review by the Energy and Petroleum Regulatory Authority which is set for next week.

Kenyans are waiting for outcome of a probe into the runaway cost by the National Assembly with the Finance and National Planning Committee which is expected to table its recommendations on cutting the fuel costs next week.

“The government never makes promises in vain. We have sincerely heard the cry of our fellow citizens and we live and interact with people on a day to day basis,” Matiang’i said.

KPLC has been running at a loss, with indicators pointing to ineffective Power Purchase Agreements that have left the company heavily indebted while ironically paying for excesses energy it does not need in take-or-pay arrangements blamed on poor negotiations and vested interests.

Besides high fixed capacity charges amounting to Sh47 billion, the PPAs are bound by Commercial Operation Dates that are not aligned with the company’s power demand. This has often resulted in excess power generation even when the demand is low.

In the 2019-20 Financial year, KPLC posted a loss before tax of Sh7 billion.

Its negative working capital position for the fourth consecutive year has also raised substantial doubt about its ability to sustain operations.

The system losses stood at 23.47 percent, exceeding the 19.99 percent limit approved by the Energy and Petroleum Authority.

This is attributed to lack of internal control measures put in place to mitigate losses including governance.The company’s obligations to pay for goods and services that were acquired from suppliers were also not met with a long outstanding balance of Sh1.3 billion resulting to discontentment of financiers and suppliers.

Further, the company did not submit to the Unclaimed Financial Assets Authority Sh1.2 billion of deposit refunds to consumers, unidentified receipts, unpaid customer electricity deposits, unpaid wayleaves compensation, and unclaimed dividends and stale cheques as required by the Unclaimed Financial Assets Act 2011.

 

Edited by CM