Utility companies are reeling from an upsurge in vandalism linked to high demand for scrap metal.
Besides costing the economy billions of shillings in lost business and cost of replacement, the vandalism crisis is exacerbating insecurity as scrap metal collectors engage in a countrywide plunder, burglary and other crimes to feed the growing demand.
Telecoms, internet service providers, transport and power distribution firms face loss of revenue, repair, replacement and security costs.
Copper wires, electricity transformers and cables and road safety infrastructure are the most affected by the poorly policed trade.
Metal smelters, steel mills and exporters have largely been blamed for fuelling vandalism by providing a ready market especially for copper wires and bridge guard rails.
“We are unable to establish the source of scrap metal coming to the factory. Railway metal is easily recognisable, and when a dealer brings it, we alert the police,” said Raval Narendra , chairman of the Devki Steel Mills.
On average, Telkom Kenya experiences two to three cuts daily on its national network. As a result, it has had to withdraw fixed line telephony services in rural areas.
“Between 2006 and 2009, a total of 4,631 cases occurred whereby the losses we have incurred amount to approximately Sh2 billion,” said Telkom Kenya in a statement to the Business Daily. This translates to an annual loss to the tune of Sh500 million.
The operator has been forced to erect perimeter walls and set up alarm systems around its installations besides employing more than 120 security guards in the last one year.
Industry players have petitioned Parliament to amend the law and make telecommunication and power cable vandalism an economic crime and provide stiffer penalties from the current fine of Sh100,000 or imprisonment to a term not exceeding three years, or both.
“A person who severs any telecommunications apparatus or other works under the control of a licensee, with intent to steal, commits an offence and is liable on conviction to a fine of not less than five million shillings or to imprisonment for a term of not less than ten years or both,” reads a proposed amendment in the Energy and Communications Law (Amendment) Bill, 2011 which is currently at the committee stage at Parliament.
The same penalty provisions apply to vandalism of all power facilities such as conductors, transformers, insulators, towers and reactors.
Mr Raval is of the view that Kenya should ban the exportation of iron ore mined in the country, which would result in a 90 per cent reduction in scrap metal demand. This would also challenge local steel mills to develop their capacities in steel and iron production.
The Scrap Metal Act, a statute that makes provision for the control and regulation of dealing in scrap metal, commenced operation in August 1959. However, in October 2007, amendments resulted in the abolition of the requirement for a licence to deal in scrap metal.
Police powers to inspect scrap metal for export were removed.
This has in particular made it easy for scrap metal dealers illegally engaging in the export of scrap copper to conceal the copper.
Direct losses due to vandalism of Kenya Power transformers, conductors and copper wires increased by 40 per cent to Sh263 million in 2008 from Sh187.3million in 2007.
Telkom Kenya, Safaricom, Wananchi Group, Kenya Data Networks, Access Kenya and Kenya Power — all of which are particularly susceptible to both cable and optic fibre vandalism — have teamed up to set up an industry committee to lobby MPs to amend the Scrap Metal Act.
The lobby group is calling for the reintroduction of the licensing for all scrap metal dealers; allowing the police to vet prospective dealers before issuing them with licences and the introduction of a certificate of inspection to ensure that no banned metals are exported.
Irshad Sumra, secretary general of the Kenya Iron and Scrap Metal Association, said vandalism is mainly driven by informal metal dealers who sell their wares to backstreet fabricators who offer a better price than association members.
“We were first to lobby the government to reintroduce licensing for scrap metal dealers so that we weed out the unscrupulous dealers,” said Mr Sumra. He said members of his association were ready to engage Kenya Power, telecoms operators and steel millers in talks to jointly address the challenge of vandalism.
The Ministry of Roads and industry players are now calling for a total ban on scrap metal trade, a move opposed by the steel industry.
Mr Raval warned this would increase cost of doing business and cut jobs because steel millers would have to import scrap metal.
“Devki Steel Millers employs about 1,700 people and a total ban on scrap metal trade would lead to massive layoffs.”
Finance minister Uhuru Kenyatta banned the export of scrap aluminium, steel, copper wires and cables in 2009 following a petition by KPLC and Telkom Kenya. This was later followed by a ban on exporting scrap metals in the region by East African Community (EAC) partner states.
But the consequences were not exactly as desired because vandals continuing with exports to China and other emerging markets just substituted copper.
“This has led to an increase in vandalism of optic fibre (70 per cent) as compared to Copper wires (30 per cent),” said Angela Mumo, the Orange Kenya corporate communications manager.
The proposed amendments to the Scrap Metal Act provide a stiff punishment for traders who deal in scrap metal without licence. For first time, offenders face a fine of not less than Sh500,000 or imprisonment for a term not less than one year or both. Second time or subsequent offenders would face a fine of not less than Sh2 million or a jail term of not less than two years or both.
The licence will specify the location of the premises and any particular scrap metal in which the licensee may or may not deal in.
Statistics from Telkom Kenya show that of the 336 telecoms vandalism arrests made between 2008 and last year, 45 and 56 cases attracted fines of between Sh5,000 to 10,000 and jail terms of one year or less respectively. 235 cases are still in court, translating into a conviction rate of about 30 per cent.
Data from Kenya Power shows the firm incurred direct costs of Sh1.08 billion as a result of vandalism involving more than 2,134 transformers and 167 conductors between 2004 and 2009.
Furthermore, the firm loses about Sh600 million annually in direct costs like equipment replacement. Lost of business for the firm and its clients.