Kenya Power directed to submit reforms report as profit surges to Sh319 million

Energy Cabinet Secretary Opiyo Wandayi has directed Kenya Power to submit a comprehensive report detailing its ongoing reforms aimed at enhancing operational efficiency and lowering energy costs for consumers within a month.

This comes after the utility firm posted a profit of Sh319 million for the half-year ending December 2023, a significant recovery from a Sh1.1 billion loss in the same period the previous year.

The profit increase has been attributed to higher electricity sales and the implementation of a cost-reflective tariff.

The utility firm is also required to present a plan for liquidity and balance sheet strengthening to ensure a return to sustainable profitability.

“I directed the board to urgently embark on an institutional reform pathway and report back to the Ministry, covering key areas,” Wandayi said during his first visit to Kenya Power headquarters, where he also toured some of its infrastructure.

Wandayi emphasised the need for Kenya Power to address several critical issues, including project challenges, resource requirements, timelines for completion, accountability, and expected outcomes.

One of the ministry’s primary concerns is the company’s technical and commercial loss reduction strategy, intending to lower losses from the current 24 per cent to the tariff-allowable level of 19.5 per cent over the next three years.

System disturbances

Additionally, Kenya Power is expected to submit a report on the technical and operational capacity of the National Control Center, which manages power infrastructure and system disturbances.

This comes after recent nationwide blackouts, with the most recent occurring on Friday, last week.

The company has also been tasked with improving customer service by enhancing the use of the Integrated Customer Management System at the National Customer Call Centre.

The aim is to ensure that customer complaints are resolved within the timelines specified in the KPLC Service Charter and that power outages meet agreed performance targets.

Wandayi also called for improvements in the company's supply chain and logistics strategy to address frequent shortages of critical materials, including transformers, meters, and poles, which are essential for resolving customer issues efficiently.

The report should also outline collaborative efforts with the Rural Electrification and Renewable Energy Corporation (REREC) and the Kenya Electricity Transmission Company Limited (KETRACO) to curb illegal connections and address public safety concerns.

Wandayi’s directive follows a series of countrywide blackouts and comes as the ministry seeks to convince Members of Parliament to lift a moratorium on Power Purchase Agreements (PPAs).

The moratorium was imposed earlier this year to investigate the high power bills consumers have faced, allegedly due to expensive electricity supplies from Independent Power Producers (IPPs).

Kenya Power’s last PPA was signed in 2020. The firm currently has about 20 IPPs contributing to the energy mix, including wind, solar, hydro, geothermal, and thermal power.

These IPPs provide roughly 10 per cent of the country’s installed capacity, with most contracts set to expire around 2034.

Kenya Power Managing Director Joseph Siror has previously highlighted the need for more IPPs to meet growing electricity demand, which has risen to 2,177MW and, at times, exceeds 2,200MW.

The country's installed capacity stands at 3,311MW, though effective generation is slightly lower due to varying output from renewable sources like wind and solar.