Kenya Power #ticker:KPLC plans to lease a fleet of vehicles for its daily operations as it moves away from car purchases to ease its cash flow problems.
The company, which spent Sh16.19 billion in the financial year to June 2020 to purchase property and equipment such as transmission wires, transformers and vehicles, says the move will also help lower its transport costs.
Kenya Power currently owns a fleet of 2,269 vehicles mostly made up of motorcycles, light utility double cabin pickups, heavy-duty single cabin pickups, medium trucks and truck-mounted cranes.
“The company wishes to explore fleet leasing as an alternative to fleet ownership in an endeavour to lower transport costs and improve on fleet availability and reliability index in addition to leveraging on other benefits associated with the fleet leasing option such as cash-flow management,” Kenya Power said in an Expression of Interest (EoI) notice.
The move comes at a time companies and government agencies are adopting vehicle leasing to preserve cash and lower annual depreciation costs associated with tangible property and equipment.
“If the leasing is evaluated and found more cost-effective than ownership, the company proposes to adopt a phased approach to onboarding approximately a similar number of units each year over the estimated economical life of the various fleet categories,” Kenya Power said.
Kenya Power is betting on lowering its operating expenses to boost its performance at a time the State has trained its focus on carrying out drastic reforms at the company to get it rid of corruption especially in procurement.
The utility firm bounced back from a Sh939 million full-year net loss to post a Sh1.48 billion after-tax profit for the financial year to June 2021 largely boosted by lower costs and higher revenue collections.
The company is technically insolvent with its short-term liabilities that include dues to lenders, independent power producers (IPPs) and other suppliers exceeding its short-term assets.
Kenya Power reduced its expenses to Sh39.86 billion in the year to June down from Sh47.83 billion last year.