Kenya Power delays connecting customers after paying Sh12bn
The Cabinet has ordered a split of Kenya’s electricity transmission system to ensure that a power failure in one part does not affect the whole country. FILE PHOTO | NMG
Auditor General Nancy Gathungu has put Kenya Power on the spot for delaying connecting customers who had paid Sh12 billion to the grid, which she says is contrary to the firm’s customer charter.
Ms Gathungu said despite efforts by customers to get linked to the grid, the electricity distributor has not connected them.
The Auditor-General said this is contrary to Kenya Power’s customer charter, which requires that connections be done between seven and 28 days based on the type of connection.
“Management, therefore, continues to hold customer electricity connection fees in the form of capital contributions amounting to Sh12,079,656,000, as disclosed in Note 28 (a) to the financial statements,” she says in the audit report for the year ended June.
During the period under review, 21,734 projects with capital contributions valued at Sh3 billion had no cost attributed to them.
Ms Gathungu said in the report that management did not explain how projects paid for could be completed and closed in the system without the company using any materials to connect electricity for the customers.
Further, 349 customer projects initiated with a total expenditure of Sh321 million did not have corresponding capital contributions by the customers, indicating connections without payment of the required fees.
She says the delayed connection of these customers denies them electricity and revenues to the company.
However, Kenya Power management has attributed the delays in the completion of projects to wayleave acquisition challenges they face in the line of duty.
These include re-designs of some projects and sometimes abandonment of the same, non-availability of critical materials needed for construction such as cables, conductors, meters, and transformers, suspension of the construction contracts with hired labour and transport contractors and ongoing court cases.
Kenya Power reported a Sh3.19 billion net loss for the year ended June 2023 as it took a hit from a sharp rise in financing costs on its hard currency obligations due to the weakening of the shilling.
The listed State-owned utility had posted Sh3.2 billion in net profit the previous year.
The company attributed the latest performance that saw it return to lossmaking to high finance costs owing to fluctuations in the exchange rate between the dollar and the shilling.
Its revenue from electricity sales grew by 21 percent from Sh157.3 billion to Sh190.9 billion, mainly supported by an expanding customer base.
This came as operating expenses reduced from Sh36.9 billion in the prior year to Sh34.9 billion in the year.
The utility, however, said finance costs rose significantly by 89 percent from Sh12.76 billion to Sh24.15 billion mainly driven by the depreciation of the Kenya shilling against major international currencies.
