Mismanagement and overwhelming internal revenue leakages at the national electricity distributor, Kenya Power has been cited as the primary cause of mounting debts and threatening its collapse.
The situation has literally put the highly monoplised institution on its death-bed with insiders decrying lack of internal controls to address the existing managerial deficiencies headed by Managing Director Bernard Ngugi.
“The institution suffer from internal mismanagement and managerial inadequacies. Revenue leakages is the order of the day. Interference from the parent Ministry is also a concern. Unless and until these issues are addressed, Kenya Power will just collapse.” An insider privy with the goings on intimated.
“This is a very basic issue of accountability. Kenya Power deals on cash basis. Majority of the clients who re in excess of 7 million pay for electricity before getting especially those who load tokens. This means there is payment before service is provided. The question is, where does the money go?” another source posed.
Yesterday, in what appears as a pre-emptive move on the imminent collapse of the utility firm, Energy Principal Secretary Joseph Njoroge pushed for Kenya Power to come up with modalities that will enable it service its debts spiraling to in excess of Sh42.5billion.
Njoroge’s action is also widely interpreted as an attempt to exonerate the ministry from blame in case of any eventuality amid claims of massive managerial deficiencies.
“The debt by Kenya Power is huge and it is not just KenGen but also other organisations. Kenya Power is the only off-taker of electricity and it has obligations on producers and the government will not allow it to be insolvent.” Njoroge said.
As of June 2020, Kenya Power had accrued debts to its various power suppliers to a tune of whopping Sh47.85 billion.
This includes Sh23.7 billion owed to KenGen, Sh19.48 billion owed to independent power producers, and another Sh4.67 billion to Kenya Electricity Transmission Company (KETRACO).
In 2018, KenGen penalised Kenya Power KSh1 billion as interest on late payment after the expiry of the 60-day window beyond which the debt begins earning interest.
By then, Kenya Power had owed KenGen KSh13.71 billion for more than 60 days while a further KSh694.63 million had remained unpaid for over a year.
As of June 2020, Kenya Power, the sole listed power distributor was selling electricity to over 7.5 million clients.
Pundits contend that a web of well-connected technical insider cartels working in collusion with external investor players have been frustrating full implementation of Energy Act 2019 that provides for the opening up of the sector.
Effectively, the well-choreographed managed process thwarts efforts by state-owned Kenya Electricity Generating Company (KenGen) from direct electricity sales to create competition and efficiency.
In March this year, Kengen expressed interest in targeting flower firms and large industries in the proposed Naivasha Industrial Park as first customers for direct electricity sales.
However, Energy and Petroleum Regulatory Authority (EPRA) is yet to act on this proposal.
Until now, KenGen has been restricted to electricity generation, alongside Independent Power Producers (IPPs).
The high cost of cost of production attributed to high cost of unreliable power supply has adversely affected key sectors including the President Uhuru Kenyatta’s main four delivery pillars on; manufacturing, food security, affordable housing and Universal Health Coverage alongside attracting Foreign Direct Investments (FDI’s).
