Electricity distributor Kenya Power #ticker:KPLC has raised the alarm over low consumption and high payment default rate in rural areas hurting its business, even as the State continues to connect more households under initiatives such as the Last Mile Connectivity project.
Kenya Power managing director Bernard Ngugi said some rural customers could not repay the connection loans while others lacked electrical appliances to boost consumption.
“With connectivity projects initially targeting electrification of low-income settlements through subsided rates and loans, there were emerging challenges as not all connected customers are able to raise adequate income to settle their bills and repay loans. There is usually a lag in demand for newly connected customers as they require time and resources to acquire electrical appliances,” Mr Ngugi said.
Mr Ngugi said there were measures being taken to address the challenge, adding that the removal of standing charges offered relief to the customers who are now not charged when they fail to consume power.
The poor households hooked to the grid due to their proximity to the transformers are, however, expected to offset the Sh15,000 connection cost through consumption, making the dormant meters an added burden to the power distributor who may have to recover the meters.
Kenya Power is expected to foot the bill for maintaining the expanded power distribution lines, which are also built through the government’s Rural Electrification programme, straining its resources with minimal returns.
Power lines remain idle in the rural areas where consumption is not generating any income, pushing the utility firm further into debt and financial woes as recently revealed by the 2020 Economic Survey.
The survey by the Kenya National Bureau of Statistics showed that that revenues from rural electrification continued to decline even as the number of households reportedly connected were on the rise.