Troubled Kenya Power CEO resigns unexpectedly

Troubled State-controlled electricity distributor Kenya Power #ticker:KPLC on Wednesday said Chief Executive Bernard Ngugi has resigned and is expected to leave his post immediately, in shock changes at the loss making utility. 

Mr Ngugi who has separately come under pressure from shareholders of the Nairobi Securities Exchange (NSE) listed firm, government and trade unions over turn around plans amid a streak of losses at the utility has quit barely two years after he was appointed to the helm of the firm.

"We wish to inform our shareholders that the board of directors...have appointed Eng Rosemary Oduor as the acting managing director and chief executive of the company with effect from 4th August 2021 following the resignation of Mr Bernard Ngugi," Kenya Power chairman Vivienne Yeda said in a statement.

The utility did not provide additional details surrounding Mr Ngugi's resignation.

Kenya Power chairman said Ms Oduor who was formerly the general manager incharge of commercial services and sales will take charge of the firm in an acting capacity.

"Engineer Oduor has wide experience in power engineering and management having joined the company in 1991 and served in various senior positions," said Ms Yeda.

Kenya Power named Mr Ngugi, a former head of its procurement division as chief executive officer in October 2019 in changes that sought to have the power monopoly improve its financial position amid a streak of losses.

Mr Ngugi, a Kenya Power insider who had served at the firm for over three decades took over from Jared Othieno who had been the acting CEO since July 2018 following the exit of the former CEO Ken Tarus who was charged in court with conspiring to commit an economic crime and abuse of office.

Mr Tarus was charged alongside his predecessor, Ben Chumo, and a number of other senior managers of the power distributor. They have denied all the charges.

Mr Ngugi who prior to the appointment to the top position was the company’s general manager in charge of supply chain said during his appointment he would immediately seek to turn around the loss making State run firm’s fortunes.

“My immediate focus is to lead the company towards improved profitability while ensuring the business fulfills its socio-economic purpose,” he had said following his appointment.

However, since he took office, Mr Ngugi's controversial multi-pronged turn around plan at the loss making entity has faced headwinds during his brief reign at the helm.

Kenya Power in May made a U-turn on plans to lay off an unspecified number of employees from its 10,481 workforce in a bid to cut costs as part of a fresh plan to return to profitability amid pressure from unions.

The loss-making company had earlier said the restructuring plan had been 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 jobs restructuring plan became a flashpoint with unions opposed to it at a time the unemployment rate has shot up.

The retrenchment plan was one of the measures fronted by Mr Ngugi ostensibly to improve the financial position of the company in which the National Treasury has a 50 percent stake.

Higher remuneration costs contributed to overall administration expenses rising by Sh5.6 billion to Sh26.7 billion, plunging the company into a Sh939.4 million loss in the year to June.

The electricity distributor’s troubles have sucked in key constituents, including suppliers like KenGen, which has not been paid some Sh24 billion.

MPs last year demanded a forensic investigation on how the Kenya Power bought faulty transformers and prepaid token meters.

The transformers had failed the company's own quality tests; they were of poor build, made of poor quality materials, were leaking oil and losing too much power, said MPs.

The National Assembly Public Investments Committee in its report on State Corporations wants the forensic audit done by the Auditor-General.

The government earlier this year formed a team to renegotiate fixed charges in power contracts the monopoly signed with electricity generating companies downwards amid complaints of high electricity charges by consumers.

In a bid to stay afloat, Kenya Power under Ngugi invited local and international banks to offer it new cheaper loans that will be used to retire some of its Sh55 billion worth of commercial debt, potentially reducing its finance costs by hundreds of millions of shillings.

Ngugi had argued the utility is seeking to take advantage of ultra-low interest rates in developed markets such as Europe and the United States to refinance its existing debt.

Kenya Power also wants to reduce its technical and commercial losses to between 10 to 12 percent, by installing advanced metering infrastructure for consumers to improve billing and curb the menace of power theft.

Recently, Kenya Power distanced itself from the ownership of transformers that the Kenya Revenue Authority (KRA) is set to auction over unpaid taxes.

The taxman through the latest Kenya Gazette notice had given Kenya Power 30 days to pay duty and storage fees for the transformers that were shipped into the country seven years ago.