Kenya Power’s unpaid customer bills shot up by Sh16 billion in the year ended June 2023, bringing customer defaults to Sh35 billion, hurting the firm’s efforts to wean it off reliance on the Treasury.
The spike is one of the sharpest in recent years, making it one of the single-largest headaches for the firm amid increasing customer numbers.
Kenya Power sank into a net loss of Sh3.19 billion in the period, underscoring how financing costs and customer defaults have forced it to rely on the Treasury and development partners for finances.
Agencies owned by the national and county governments account for about 33 percent of the unpaid bills, with the African Development Bank (AfDB) calling on the two levels of government to settle the debts and boost Kenya Power’s recovery efforts.
“State agencies are among the leading contributors to outstanding electricity bills, presenting significant challenges for the Kenya Power & Lighting Company PLC (KPLC) in maintaining its operations,” says the AfDB in its latest assessment of the firm’s operations.
“The share of parastatals, national and county governments in the overall electricity customer debt stands at 30 percent as of June 2023. There is a need to both tackle the unpaid bills issue and secure additional revenue streams required to ensure the sustainability of KPLC.”
The electricity distributor disconnects customers who fail to pay within 21 days after billing. It does not charge interest on balances in arrears.
Kenya Power also disclosed a three-year plan to phase out post-paid meters in favour of pre-paid meters in rural Kenya to help the company collect revenue upfront and significantly arrest the spike in customer defaults.
Kenya Power had 9.2 million customers as of last June driven by 318,217 new connections.
The number is set to continue growing amid several projects to light up more homes and institutions.
The firm increased provisions for impairment of electricity receivables to Sh17.28 billion in the year ended June 2023 from Sh14.9 billion a year before, pointing to the anticipated surge in customer defaults that have now caught the eye of the AfDB.
Kenya Power recently tapped debt collectors to help recover money from customers who have since been disconnected but the surge in unpaid bills points to limited success of the exercise.
Last September, Kenya Power sought the Treasury intervention to recover arrears owed by large consumers in which the government has a stake and have since run into financial headwinds, rendering them unable to pay for electricity consumed.
