Kenya Power needs ‘radical surgery’ as first step to cheaper electricity  

When President Uhuru Kenyatta directed that electricity tariffs be reduced by 33 percent within four months starting September, Kenyans breathed a sigh of relief that exorbitant power bills would finally come down. 

The steep cost of electricity has in the past been blamed for the high cost of living and doing business in Kenya.  Yet the country has a surplus of power with an installed electricity generating capacity of 2,766 megawatts (MW) against a peak demand of about 1,936 MW – an excess of 800 MW.

Excess supply is partly due to the massive expansion of power generation capacity in recent years mainly renewable sources like geothermal, wind and solar. If we are producing more power than we consume, then why is electricity so expensive in Kenya?

Some argue that surplus electricity is not always cheaper since it comes at additional cost of operating and maintaining the expanded energy infrastructure. Others have pointed a finger at the expensive Power Purchase Agreements (PPAs) between Kenya Power and Lighting Company and Independent Power Producers (IPPs).

One can add institutional failure notably corruption and mismanagement, notably at Kenya, the monopoly electricity distributor in the country. It is true that some of the PPAs have saddled Kenya Power with expensive energy from the IPPs but the fact is, failure to reform the power utility owing to deeply-entrenched vested interests is a major driver of systemic challenges facing the energy sector.

Incidentally, a Presidential Taskforce appointed to review all PPAs recommended, among other things, fast-tracking and deepening of reforms at Kenya Power “to restructure it into a commercial entity that is both profitable and capable of delivering efficient, cost-effective electricity supply to all consumers.”

Apart from the costly electricity purchase contracts some of which Kenya Power has been locked in since the 1990s, serious governance lapses at the institution have created lucrative opportunities for cartels to thrive aided by management and staff.

This was evident when shortly after the taskforce presented its report to the President, heads started to roll at the utility, with 59 procurement officers sent home to pave way for investigations into alleged massive graft in the supply chain. Not to mention that several senior managers including former CEOs of the organisation have been facing graft-related charges in the courts since 2018, involving irregular procurement of transformers and abuse of office.

This is why, this time round, the State should spare no effort in smoking out cartels that have been sabotaging reforms at the firm. A good example is an attempt a few months ago, to physically map out all 8.2 million customer meters in the country in a bid to curb electricity theft through illegal connections and system losses, said to cost the company over Ksh2 billion annually. Unfortunately, the project reportedly stalled due to sabotage by internal forces.

Uprooting the graft networks at Stima Plaza is imperative if Kenyans are going to benefit soon from the lower cost of power. Kenya Power remains the weakest link in efforts to create a sustainable energy sector able to provide affordable and accessible energy for all Kenyans.

Indeed, one of the biggest legacies of the current administration is connecting the highest number of households to the national grid since Independence. Electricity connections in Kenya shot up from 20 percent in 2012 to over 75 per cent as of 2019, thanks to the Last Mile Connectivity program.

However, such gains toward universal access to electricity risk being eroded by vested interests hell-bent on blocking reforms at Kenya Power. Expunging the mess must start at the top all the way down. A report by a Norwegian NGO published in 2019 details how illicit activities are entrenched in the company, including junior staff colluding with cartels involved in illegal electricity connections and vandalism of transformers.

The infamous pre-paid ‘token heists’ involving manipulation of the IT system to divert revenue from the firm and steal from customers is a symptom of a deeply dysfunctional organisation in urgent need of ‘radical surgery’ to purge it of the deep rot within.

There are also reports of large electricity consumers such as factories bribing Kenya Power staff to falsify meter readings so as to pay less. Those involved in the racket must be prosecuted and surcharged for the income losses to Kenya Power.

An independent financial and revenue audit should be conducted to ascertain why the entity has been posting such massive losses. A staring point is recent reports by the Auditor-General.

Lowering the cost of electricity is just one side of the equation. We must ensure a sustainable energy sector capable of providing affordable and accessible electricity to all Kenyans. Endemic corruption, ineptitude and mismanagement at the State utility firm remain the biggest threats to achieving this goal.

Mr. Murumba is CEO Impulso Kenya Limited. Email: peterwafula@impulsokenyaltd.com

  

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