Kenya Power to get Sh6bn for rural electricity debt

The Treasury will disburse Sh6 billion to Kenya Power #ticker:KPLC as part of the Sh11.9 billion the government owes the utility firm for managing the electricity network under the rural electricity scheme.

Energy Cabinet secretary Charles Keter said the money had been factored in the supplementary budget and is expected to draw by January 2020 to help relieve the utility firm suffering under heavy debt and decreased earnings.

Mr Keter said the move is part of the liquidity plans laid out to save the struggling power distributor whose ballooning debt drove finance costs by Sh3.267 billion in the year to June 2019.

“In the first supplementary budget, we have secured Sh6 billion as part of the 11.9 billion owed to Kenya Power for the Rural Electrification Scheme. The balance will be paid in the next financial year,” said Mr Keter.

Kenya Power charges the government fees for managing the rural electricity network under the scheme started in 1973 to extend electricity to the rural areas.

The Bill has been on the rise after more rural customers got hooked into the main grid under the last mile connectivity programme.

The government and other state agencies remain among the top debtors for Kenya Power with the state parastatals, national and County governments having held Sh4.7 billion in pending electricity bills alone as at the end of June 2020.

Kenya Power managing director Bernard Ngugi last week told shareholders that the firm was exploring how to use the Treasury to recover some of its debt owed by the government.

“One of the major gains for the Company in the Energy Act 2019 is the power to recover any outstanding bills incurred by the government and its agencies through the National Treasury,” Mr Ngugi said during the virtual annual general meeting.

The government which hold majority shares in the Nairobi Securities Exchange-listed firm at 50.1 per cent, is also leading a scheme to convert Kenya Power’s short term debt to concessional loans.