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Kenya Power and Lightning Company To Cut Costs and Intensify Debt Collection In Turnaround Plan

Kenya Power is exploring a number of strategies to make a turnaround from its losses with focus on reducing costs.

The company said it has already cut its corporate budget and is now exploring other cost cutting measures include cutting down on staff.

“As we go forward, we are focusing on implementation of a recovery strategy that focuses on growing electricity sales, enhancing revenue collection, managing costs and improving system efficiency,” said Managing Director Bernard Ngugi.

“A key pillar of the success of the recovery strategy is prudent cost management…we are also looking at reduction of staff costs, office expenses and other recurrent expenditure.”

Mr.Ngugi was speaking during Kenya Power’s Annual General Meeting which appraised shareholders of the electricity distributor’s results for the year to June 2019.

The meeting had been pushed for almost a year following the delay in the appointment of a new country Auditor General. The Auditor General is expected to look through the State agency’s books before shareholder meet and approve the accounts.

In the financial year, Kenya Power reported a Sh262 million profit after tax, a 90 percent drop from Sh3.26 billion in 2018.

In the period to June 2020, the company’s unaudited results showed that it had sunk into a Sh2.98 billion loss.

Ngugi disclosed that the company was adopting a countr-focused business model that would help turn the regions into profitability.

Our target this year is to grow sales by three per cent driven by new customer connections, enhancement of revenue protection measures and supporting demand growth for customers,” he said.

Kenya Power has since July connected 140,000 new customers, 15,000 more than its 125,000 target despite the Covid-19 pandemic, Ngugi said.

In a bid to increase revenues, the company is also pushing to effect a tariff hike. If the plan goes through, low income households may be expected to pay more for power consumption.  The current rate is Sh10  per 100 units for consumers. Kenya Power says the tariffs have affected their earnings.

“We are actively engaging the regulator and other stakeholders on the critical need for a cost-reflective tariff, which will include a restructure of the lifeline band and review around system losses to reflect grid dynamics,” Ngugi told shareholders.

Energy Principal Secretary Joseph Njoroge said the government had deferred Kenya Power’s loans with the Energy Ministry lending a hand in the collection of the agency’s debts from counties and other agencies.

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