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Treasury to lock out Kenya Power from electricity transmission

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Kenya Power will no longer be responsible for construction of electricity lines if proposals by National Treasury and Economic Planning Prof. Njuguna Ndung’u sail through.

During a budget speech for the financial year 2023/2024 made Thursday, Prof. Ndung’u announced four points action plan that target to turnaround electricity distributor currently choking in debt.

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Prof. Ndung’u said government is keen on ensuring KPLC is financially sustainable by restructuring its balance sheet mainly focusing on the huge loan balances, payables and receivables in order to reduce liquidity gaps facing the company.

If the proposals are adopted by the National Assembly, Kenya Power will be forced to transfer all its transmission and power lines assets to the Kenya Electricity Transmission Company (KETRACO).

“The government will settle outstanding Rural Electrification Scheme (RES) operations and maintenance costs which has a deficit of Ksh 19.4 billion as of June 2022 and ensure that KPLC and Rural Electrification and Renewable Energy Corporation (REREC) enter into a commercial contract for future rural electrification scheme maintenance cost,” said Prof. Ndung’u.

The government also plans to implement a turnaround strategy that will ensure the power distributor reduces system losses from 22.4pc to 14.4pc by end of June 2025.

Treasury also proposes to shake up Kenya Power’s governance by giving private sector players fair representations to reflect its shareholding structure.

According to the CS, the measures which commenced in the FY2022/23 are aimed at turning around Kenya Power and Kenya Airways with the aim of improving their efficiency, reducing costs and increasing revenues.

“The government policy stance is to turnaround the airline and position it as a pan-African carrier that will ensure it is run with profitability and sustainability objectives eventually reducing the airline’s dependency on budgetary support,” he added regarding KQ.

Prof. Ndung’u has further urged the National Assembly to accelerate the passing of the Privatization Bill 2023 submitted last month which seeks to repeal the current Privatization Act of 2005 and restructure State Owned Enterprises (SOEs).

Treasury backs enactment of the bill to enable selected SOE to achieve their full potential by entrenching commercial principles and reduce their reliance on the exchequer funding.

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