Kenya Power’s push to increase tariffs for homes and businesses to return it to profitability will make the country uncompetitive.
The utility firm on Wednesday reported its worst profit in 16 years.
The firm’s net profit plunged 92 percent from Sh3.26 billion to Sh262 million in the year to June — the lowest profit since it returned to profitability in 2004 after posting a Sh2.89 billion loss the previous year.
Executives at Kenya Power look set to use the results to pile pressure on the Energy and Petroleum Regulatory Authority (EPRA) — the electricity sector regulator — for higher tariffs.
Kenya Power wants to increase the consumption charge for those consuming less than 100 kilowatts per month to Sh12.50 a unit, up from the current Sh10.
However, increasing power tariffs will make it hard for local businesses and manufacturers to compete in the region where some enjoy very low cost of production.
Kenya Power is a monopoly and the country relies on it to power homes and industries which are critical to growing the economy.
The firm is likely to face further challenges as it tries to replace aging infrastructure, which will see costs escalate.
Upgrading aging infrastructure such as transformers and transmission lines require huge investments that from the look of things the company cannot afford.
The government should take the responsibility of upgrading the aging infrastructure to cushion the power utility and save it from sliding into losses.
On their part, the power utility firm should seal the loopholes that deny it a lot in revenue.
The company should crack down on illegal connections that deny them much needed revenue and take action against staff who engage in fraudulent activities.
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Note: The results are not exact but very close to the actual.
