Economy

Kenya Power to settle Sh23bn KenGen debt

energy

Energy PS Joseph Njoroge. PHOTO | SALATON NJAU | NMG

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Summary

  • KenGen, whose sole customer is Kenya Power, had not been paid Sh23.9 billion by the monopoly as of June 2020.
  • The utility also owes independent power producers Sh20.5 billion.

The government says it will ensure that Kenya Power #ticker:KPLC pays its debt to KenGen #ticker:KEGN and other power producers, responding to concerns that the electricity distributor’s default could hurt the entire supply chain if it is not resolved in the near term.

KenGen, whose sole customer is Kenya Power, had not been paid Sh23.9 billion by the monopoly as of June 2020 and has one of the largest claims.

The utility also owes independent power producers Sh20.5 billion even though it was not immediately clear how much of the amount is in default.

The State says Kenya Power would settle its obligations though no timeline was given.

“The government is a shareholder in both KPLC and KenGen and will make sure that both companies are [financially] feasible,” said Energy PS Joseph Njoroge at KenGen’s virtual annual general meeting held last week.

“There have already been interventions including deferring KPLC’s obligations to the National Treasury.”

He added that the government is cognizant of the fact that the entire electricity supply chain would be at risk if Kenya Power continues to be in default.

Dr Njoroge, however, did not give specifics of the interventions the State could make to fast-track the payments of the electricity suppliers' debt.

The utility says it is working with the government on several initiatives to improve its liquidity position, including renegotiation of loan terms and deferment of interest. Others are the impending review of the Power Purchase Agreements.

“Kenya Power can be resuscitated and continue working as a financially feasible organisation. I have no doubt that the with commitment that not only involves the Ministry of Energy and the National Treasury but the main government, KPLC will be resuscitated and will be able to meet its obligations and therefore I would like to give assurance that KPLC debt will be paid, said Dr Njoroge.

The ministry said the power distributor, which reported a net loss of Sh939.4 million in the year ended June 2020, could settle the amounts “on a payment plan agreed by the two companies”.