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KPLC Lost 3.27 Billion in 2020: Worst Economic Performance in 16years
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KPLC Lost 3.27 Billion in 2020: Worst Economic Performance in 16years 

Kenya Power Lighting company has lost 4.8 billion in revenue in 2019 after president Uhuru Kenyatta ordered the price of electricity to be lowered in 2018.

As a result, it forced Kenya Power to take short-term loans to cover their financial hole in the revenues. The chairperson of Kenya power Mahboub Mohamed said, “The review dimmed the company’s revenue prospects by Sh4.8 billion of the total projected revenues in the tariff application, thereby causing stop-gap measures in short-term borrowings to enable the company meets its financial obligations.”

Kenya Power Lighting Company

 

In July 2018, a lot of Kenyan citizens and small business owners complained about the high fees they were paying to Kenya’s power. In November 2018, the Energy and Petroleum Regulatory Authority (EPRA) lowered electricity retail prices, following an order issued by the president.

Most Kenyans lack a stable source of income and they live from hand to mouth, but when Kenya power charged them high electricity bills that doubled the monthly bills for high-income families, it triggered a lot of frustrations.

Because of the complaints raised by Kenyans, Energy and Petroleum Regulatory Authority was forced to lower the cost of electricity from November 2018 to July 2019 from Sh15.80 to Sh10 per kilowatt-hour for consumers who use below 100 kilowatts per month.

Blown by the price cut, Kenya Power gains a short-term loan, this increased the interest costs by 3.27 billion, contributing to KPLC worst economic performance in 16 years, Mr. Mohammed mentioned that operating in an environment where electricity prices are regulated has impacted the revenue margins in the worst way.

Kenya Power Lighting company net profit dropped by 92% from Sh3.26 billion to Sh262 million within one year. This is the lowest they have ever been as a company in 16 years since it came back to making profits in 2004 after losing Sh2.89 billion in 2003.

KPLC is seeking a high appraisal of the tariffs for them to make a profit by reversing their earnings.

Kenya Power Lighting company managing director Bernard Ngugi mentioned that the firm will continue pursuing a cost-reflective and sustainable tariff. He argues that high electricity fees enable them to cover the high intensive construction and maintenance costs they incur.

Since Kenya, power lighting company annually spends billions of shillings on transformers, power lines, and labor operation to serve over 7.067 million. Within one year the cost for transmitting and distributing the utility has increased by 14.1 percent to Sh39.6 billion, unlike the previous year, in which the cost used to be Sh34.7 billion.

The law requires electricity tariffs to be reviewed every 3 years but the Energy and Petroleum Regulatory Authority is inconsistent in amending the rates.

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