Kenya Power’s rural customers connected to the national grid under the Last Mile Connectivity Project are spending a paltry Sh7.20 daily on electricity, delaying the economic benefits from the billions of shillings spent on connections.
The average monthly electricity consumption of rural households is 11.44 kilowatt-hours (kWh), which is currently valued at Sh217 per month or Sh7.20 per day, according to Kenya Power disclosures.
The majority of households use electricity for charging phones and lighting, indicating they should not plug gadgets like fridges, TVs, cookers, microwaves, and electric heaters — key drivers of power use in homes.
The microenterprises that were expected to follow the connection of the villages to electricity and create jobs in the remote zones failed to establish at the desired numbers, says the African Development Bank (AfDB)—one of the financiers of the Last Mile project.
AfDB says the State should offer start-up capital to the rural dwellers to open businesses that will ease unemployment and boost electricity consumption.
At Sh7.20 daily, the daily consumption by the rural dwellers under the project is nearly a quarter of the national average for domestic customers at Sh830.27 or Sh27.67 daily.
Kenya Power says the rural consumers have failed to lift its sales, with the firm relying on industrial consumers and wealthy urban dwellers to power revenues.
The Last Mile project was launched by the government in 2015 to speed up the expansion of electricity penetration across the country, particularly in rural areas.
The AfDB reckons that Kenya is yet to reap significant benefits from the increased connection of rural homes to the national grid.
The multilateral lender together with the World Bank, the Japan International Cooperation Agency and the government have put Sh85.37 billion in the Last Mile project since its inception.
“It is expected that with time, new consumers are going to gradually engage in productive use of electricity, which would grow the electricity demand,” AfDB said in its recent review of the project.
“Hence, the need for an integrated approach by the government in providing initial start-up credit facilities to the new beneficiaries will not only help the latter but will eventually make Kenya Power and Lighting Company creditworthy and the subsidy currently provided by the government can be used for other social services like health and education.”
Kenya has expanded electricity penetration across the country, particularly in rural areas, over the past decade under the Last Mile project.
Kenya Power’s customer base grew from 3.61 million in 2015 to 9.66 million in June last year.
Most are, however, in remote areas and slums with low consumption levels since their power use is limited to lighting and charging phones, and playing with small electronic appliances.
“The financial sustainability of the LMCP [Last Mile Connectivity Project] is assessed as satisfactory even though the demand for electricity among the connected new customers is very low and not adequate to compensate for operational and maintenance costs of Kenya Power without the government subsidising this cost,” says AfDB.
The Last Mile project connected homes living close to Kenya Power transformers at a subsidised cost of Sh15,000.
The project also brought transformers and power lines to zones that had little economic value for Kenya Power to commit billions of shillings for grid development.
Poor homes got connected without paying an advance fee, with charges recovered monthly over a period of 36 months.
Kenya Power has also struggled to recover the connection fees, which are supposed to be repaid monthly over three years when paying bills.
Some homes have switched to solar or reverted to kerosene lamps to avoid paying the connection fees, further cutting the average consumption per home.
The low-cost project has been a key plank of the government’s energy policy to expand power access.
The government says the Last Mile project removed a major hurdle to the acceleration of rural electrification and spurred village economies as residents open businesses such as welding, barbershops, eateries and cyber cafés.
AfDB is one of the single biggest financiers of the Last Mile project and has pumped over Sh25 billion into the project since its inception a decade ago.
The pan-African lender mid this year disclosed that it will provide Sh12 billion to partly fund the fourth and fifth phases of the Last Mile project.
The AfDB funding is set to help connect 150,001 households, businesses and public institutions to power.
The billions will also fund the construction and refurbishment of 13 substations and 225 kilometres of distribution lines.
An estimated 291,000 new customers will be connected to the national grid in the fourth and fifth phases of the project.
The Last Mile project has been key in helping push energy access in Kenya to over 75 percent and will remain critical to the attainment of universal electricity access by the year 2030.
