- Bamburi (Sh251.5 million), EA Portland (Sh199.7 million), Mombasa Cement (Sh6.6 million), Rai Cement (Sh746,405) and Savannah Cement (Sh17.2 million).
- Heavy investments in distribution network infrastructure in support of reliable and quality electricity cited for the declining financial performance.
Image: FILE
Five cement companies owe Kenya Power a total of Sh474 million in unpaid electricity bills as at February 21.
A report by the Ministry of Energy to the National Assembly committee on Energy put the total debt at Sh474,798,497 against a monthly billing of Sh863 million.
It listed the companies as Bamburi (Sh251.5 million), EA Portland (Sh199.7 million), Mombasa Cement (Sh6.6 million), Rai Cement (Sh746,405) and Savannah Cement (Sh17.2 million).
The report was presented to the committee on Tuesday following a question by Lugari MP Ayub Savula.
The legislator wanted the ministry to provide details on monthly payments made to Kenya Power by each of the cement manufacturing firms in 2020 and 2021.
The ministry also said there are 15 operational accounts for the five cement companies and also the National Cement Company.
The total bills for the six companies amounted to Sh11 billion in 2021 and Sh7.9 billion in 2020.
Savula said he seeks an explanation on KPLC's declining financial position.
The ministry said heavy investments in distribution network infrastructure to support a reliable and quality electricity supply was financed through short term commercial debt.
It further said there have been revenue shortfalls due to reduced sales growth compared to the projected demand growth from the electricity connectivity expansion programme.
“There has been a significant increase in connections (2.3 million to 8.6 million) but this was mainly from the low consumption band,” the ministry said.
It said the expanded lifeline tariff threshold from 10 kWh to 100 kWh per month and reduction of the tariff from Sh12/kWh to Sh10/kWh resulted in a revenue reduction of Sh6.4 billion per year.
The ministry said there has also been revenue shortfalls due to delays in approval of tariffs, the last tariff approval having been made in August 2018.
“Since then, even with the new generation capacities coming on board, there has been no tariff adjustment to reflect the same,” it said.
The ministry said delays in review of the retail tariff to cover the cost of electricity purchases, transmission and distribution have resulted to revenue shortfall of over Sh20.33 billion.
It also said it had operational and maintenance challenges including illegal electricity connections, non-inspection of prepaid meters, low debt collections and high administration costs.
The ministry however said the government is keen to have Kenya Power sustainable and back to profitability.
“The government is currently implementing reforms across the sector and specifically at Kenya Power to improve on operational efficiency and seal all leakages for the sustainability of the company,” the report stated.
This follows on the recommendation of the Presidential Taskforce on Power Purchase Agreements.
The ministry said the government has issued a moratorium on signing of any new Power Purchase Agreements to give room for the review of the Least Cost Power Development Plan.
This will help create a one and five-year power supply – demand balance to mitigate against oversupply and the associated costs to the consumers.
The report further said the government through the National Treasury has been assisting Kenya Power in collecting the outstanding electricity debts owed by government agencies and county governments.
(Edited by Bilha Makokha)