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Blackout fears as Kenya Power staff plan strike

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Electricity House which is the Kenya Power head offices in a Picture taken on May 30, 2018. PHOTO | EVANS HABIL | NMG

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Summary

  • The job cuts are part of Kenya Power’s efforts to run a lean operation and compensate for revenue losses that followed the January cut in electricity prices by up to 15 percent.
  • Workers through the Kenya Electrical Trades and Allied Workers Union (Ketawu) have opposed the layoffs, arguing that the plan lacks their input.
  • Kenya Power’s salaries and wages rose 32.3 percent to Sh16.7 billion in the four years to June 2021 when its workforce shrank to 10, 177 from 11, 133 the period under review.

Kenya Power’s #ticker:KPLC workers have threatened to go on strike in a dispute over the firm’s plans to lay off 20 percent of its employees or nearly 2,000 staff, most of them ageing.

The job cuts are part of Kenya Power’s efforts to run a lean operation and compensate for revenue losses that followed the January cut in electricity prices by up to 15 percent.

Workers through the Kenya Electrical Trades and Allied Workers Union (Ketawu) have opposed the layoffs, arguing that the plan lacks their input.

The strike could damage Kenya’s economy with power outages.

The boycott threat comes just weeks after three senior managers at Kenya Power were charged with sabotage and negligence over a nationwide power outage last month.

Kenya Power last month disclosed plans to lay off 1,962 ageing workers from May in what will trim down its staff count to 8,711 by June next year.

“The company, because of low attrition rate, has an ageing and expensive workforce resulting in staff cost growing at nearly twice the rate of revenue growth,” Acting Kenya Power Managing Director Rosemary Oduor said in January 24 memo.

The company plans to replace the ageing employees with 830 younger staff at a cheaper cost, angering the combative Ketawu.

“The management is hereby advised to withdraw its proposal dated January 24, 2022, to pre-empt massive withdrawal of labour or otherwise until the constitutional rights of workers are respected and actualised,” Ketawu Secretary-General Ernest Nadome said in a February 22 notice to the utility and the Energy ministry.

The job cuts will set Kenya Power back an estimated Sh5.3 billion.

Kenya Power’s salaries and wages rose 32.3 percent to Sh16.7 billion in the four years to June 2021 when its workforce shrank to 10, 177 from 11, 133 the period under review.

The jump in payroll costs despite reduced staff numbers indicates that the salaries for those who remained on the payroll rose significantly.

Its sales grew at a slower pace of 19.3 percent in the four years.

The company made a net profit of Sh1.4 billion in the year ended June, reversing a net loss of Sh939 million the year before on the back of higher revenue and lower costs.

Sales increased by Sh10.8 billion to Sh144.1 billion while transmission and distribution costs shrank by Sh8 billion to Sh39.8 billion.

The company’s financial position is, however, still weak as it struggles to meet its short-term obligations.

Its current liabilities in the review period stood at Sh116.1 billion, dwarfing the current assets of Sh49.6 billion.

The Auditor-General has flagged the negative working capital as a major concern.

Kenya Power last May made a U-turn on plans to lay off an unspecified number of employees in a bid to defuse mounting tension.

The utility had sought a consultant with the brief to offer advice on staggered layoffs, as well as reduction of debts and electricity theft.

Ketawu threatened a go-slow over the job cut plans, which Kenya Power was eyeing to cut costs and return to profitability.

The government, which is the utility firm’s controlling shareholder, has been trying to shake up the company in recent months to address years of plunging profits owing to widespread inefficiency, high debt levels and theft of electricity.

The retrenchment plan is one of the measures being taken to improve the financial position of the company in which the National Treasury has a 50 percent stake.

The government is pushing to renegotiate fixed charges in power contracts the monopoly signed with electricity-generating companies downwards.

Kenya Power also wants to reduce its technical and commercial losses to between 10 to 12 percent, by installing advanced metering infrastructure for consumers to improve billing and curb the menace of power theft.

Kenya Power brought 12,131 gigawatt-hours (GWh) in the year to June last year but only sold 9,203 GWh or 75.86 percent of the units. This means that 2,928 GWh or 24.14 percent of the units was lost.

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