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Economy

Leakage drop earns Kenya Power Sh4bn

A Kenya Power worker. PHOTO | SALATON NJAU
A Kenya Power worker. PHOTO | SALATON NJAU 

Electricity leakages paid for by consumers have for the first time dropped to within Kenya’s preferred target, translating to about Sh4 billion in earnings to Kenya Power.

Data by the Kenya National Bureau of Statistics (KNBS), indicates that power losses dropped to 11.9 per cent in the five months to May from 19.2 per cent in a similar period last year.

The losses are the difference between the units of electricity Kenya Power buys from producers and the actual units sold to consumers.

The regulator, Energy Regulatory Commission, factors electricity losses, including leakages and theft, in the power tariffs.

Currently, the allowed power losses rate is 15.9 per cent, with a rate below translating to efficiency earnings to Kenya Power while the company absorbs cash losses when the rate stays above.

Records indicate that one percentage point in system losses is equivalent to electricity sales of Sh1 billion.

This means the electricity distributor has retained about Sh4 billion in the year to May, based on the four percentage points below the 15.9 per cent target allowed by the energy regulator, translating to revenues to the listed firm.

The losses rate has in the past stayed above target levels, making the firm lose billions and denying shareholders earnings.

“We have in the past three years spent more than Sh100 billion, upgrading transmission and distribution network that has resulted in reduced power losses,” Kenya Power said.

A cut in system losses reflects efficient use of the country’s power resources.
Kenya Power bought 4.2 billion units from electricity producers in the period to May but only sold 3.7 billion kilowatt hours (kWh), representing losses of 500 million units or 11.9 per cent.

This is a cutback from 790 million units lost in a similar period last year, which resulted in power losses rate of 19.2 per cent.

The company said it now targets to further cut network system losses below 10 per cent through more efficient transformers and reduced length of transmission and distribution lines.

The longer the distance of the power lines from power stations and substations to consumers, the more the losses.

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