The International Monetary Fund (IMF) wants the State to shake up the Kenya Power board and settle at least Sh26 billion owed to the utility as part of reforms to steady the electricity distributor.
The government last month committed to clear some Sh19.4 billion owed to Kenya Power under the Rural Electrification Scheme and is yet to pay the utility Sh7 billion as compensation for last year’s 15 percent electricity tariff cuts.
The IMF says offsetting the debt and shake-up of the board—two decisions approved by the Cabinet— should be speeded up to boost the firm’s performance.
Kenya Power has over the past few years heavily turned to the Exchequer for bailouts with the IMF saying that the utility’s liquidity gap was Sh64 billion as at June last year.
“The 2023 comprehensive revision of base electricity tariff and a Cabinet approved action plan to strengthen KPLC’s financial health should be steadfastly implemented while monitoring any residual fiscal risks,” the IMF says in a report released on Wednesday.
Electricity prices were increased from April this year by between 15 to 20 percent on average, in an effort to give Kenya Power billions of shillings in much-needed revenue to expand its network and foot electricity purchase costs.
A combination of last year’s tariff cuts, unpaid money for operational and maintenance costs under the rural electrification scheme and an increase in unpaid bills from customers have been choking the power utility.
“Together with this new tariff structure, timely pass-through of variable costs, and implementation of the Cabinet approved Action Plan, it is envisaged that KPLC’s liquidity position will improve and there will be no need for extraordinary support for the company.”
The Cabinet in June approved a shake-up of the utility’s board of directors to increase slots for the private sector with an eye on enhancing performance.
