Kenya Power has dashed commercial banks and other third parties' hopes of renegotiating fresh contracts to sell prepaid electricity tokens, in a decision that will restrict the lucrative deal to telcos.
Kenya Power acting Managing Director Geoffrey Muli said on Thursday they will not negotiate fresh agreements following the lapse of the previous contracts on August 31.
“We have no immediate plans to bring the third parties back, maybe under a different arrangement. If the need arises then we can think about it but for now, no,” Mr Muli said.
The company’s position contradicts assurances made by commercial banks to their customers that the decision was temporary.
Mr Muli said more than 95 percent of its customers are on pre-paid and use the 888880 Paybill, and therefore it does not see the need to bring back the third parties.
The State-owned power utility is banking on the use of its internal payment channels by prepaid customers to curb fraud and protect revenues given that banks and other third parties earned commissions for the purchases under the previous contracts.
“We need to ring-fence our systems and make sure that they are not open to many people because under that arrangement you will not be imagining too much that having third parties exposes our revenue due to fraud,” Mr Muli said.
Third parties that prepaid customers used to purchase tokens include Dynamo Digital and Vendit.
Kenya Power posted a net income of Sh3.8 billion in the six months to last December from Sh138 million a year earlier.
Its profits have also taken a hit from the 15 percent reduction in electricity tariffs that was effected in January, prompting cost-cutting measures as the company seeks to raise more cash to upgrade its aging system and pay debt.
Banks have since Thursdayday been sending text messages to their customers informing them they are in talks with Kenya Power and that the decision was temporary.
“Dear customer, the Kenya Power prepaid tokens purchase and postpaid bill payments services will be temporarily unavailable on our mobile banking channel effective Thursday, September 1, 2022,” NCBA Group said in text messages to its customers.
Scores of third parties, including cyber cafes and corner shops, have been buying electricity tokens for customers and earning commissions.
But the deals with third parties have come at a cost, with the Kenya Power losing revenues through collusions between rogue employees and some of the dealers.
Investigations by the power utility last year revealed the fraudulent activities of a cartel which uses a web of unidentified mobile numbers to target unsuspecting customers through the WhatsApp, Telegram and Facebook platforms.
There have also been cases where prepaid customers who buy tokens via third parties have failed to get the token, prompting a public outcry.
The decision to lock out banks and other third parties from purchasing tokens for pre-paid customers will give Kenya Power control over the sales that have also been the focus of questionable tendering.
Some two players have won multiple contracts with Kenya Power in the past despite concerns of skewed tendering that is said to have been favouring two firms.
Kenya Power says that it has a revamped internal payment platform that can now handle token purchases by its pre-paid customers.
This is the second time in three years that the State power utility has banned third parties from making purchases for customers amid the rise in fraudulent deals.
In 2019, Kenya Power stopped third parties from buying tokens for customers, prompting protests from the Consumer Federation of Kenya (Cofek).
Cofek had said that it was wrong for the State-owned power utility to punish vendors due to the criminal activities of a few individuals who should have been individually held liable.
