Kenya Power drops plan targeting cost cuts, debt reduction

Kenya Power employees repair a transformer.

Kenya Power employees repair a transformer in Nairobi. FILE PHOTO | NMG

Kenya Power #ticker:KPLC has now completely cancelled the tender in which it was seeking a technical adviser to implement a restructuring plan including reduction of debts, electricity theft and employee costs.

The loss-making utility firm first made an amendment to the initial tender by removing the clause on a phased reduction in workforce after an outcry from its employees.

But in a new twist, the electricity distributor has now cancelled the entire tender, throwing the turnaround strategy into disarray.

“The expression of interest for procurement of consultancy services support for the development and subsequent implementation of a comprehensive transformation strategy for Kenya Power and Lighting Company is hereby cancelled,” said John Ngeno, Kenya Power general manager for supply chain and logistics.

Mr Ngeno had on May 22 made amendments to drop layoffs from the scope of service to the winning bidder as had been promised by managing director Bernard Ngugi.

The cancellation of the entire tender was then followed on May 28 with an apology to prospective bidders.

Kenya Power had last month said the restructuring plan was informed by its current financial challenges which have affected its ability to run sustainably and deliver on its obligations to shareholders and the public.

The company had sought a technical adviser to implement the restructuring plan that also included a strategy for renegotiating bulk power purchases from firms like KenGen.

Kenya Power has been struggling to reduce idle electricity at a time power producers supplied it with an all-time high 1.058 billion kilowatt-hours in March.

The utility firm last year failed to sell about 24.26 percent of the power or 2.817 billion kWh it bought from generators.

The excess generation has been a major concern for Kenya Power, which has to pay for the electricity generated even when there is no market to sell it.

Operating costs have also been high, hurting earnings of the utility firm that is also struggling with the expanded network and customer base amid high system losses.

Kenya Power suffered Sh15.99 billion worth of system losses beyond what it is allowed to recover from consumers in the year ended June 2020.

The firm’s system losses were 23.46 per cent in the period, well beyond the 14.9 per cent that the regulator had allowed it to pass on to customer’s bills.

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