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Kenya Power protests 20pc tariff increase freeze

Kenya Power protests 20pc tariff increase freeze

Kenya Power has sent the Energy ministry a letter protesting delays by the energy regulator in reviewing electricity charges to increase prices by up to a fifth. FILE PHOTO | NMG Kenya Power has sent the Energy ministry a letter protesting delays by the energy regulator in reviewing electricity charges to increase prices by up to a fifth.

The listed utility firm has since last year been engaging the Energy and Petroleum Regulatory Authority (EPRA) on the application it made last September seeking a revision of tariffs to cushion it from losses and supplier defaults.

In the protest letter to the Energy ministry, Kenya Power is seeking help in ending the tariff stalemate, review of bulk power purchase agreements and sharing losses with other State firms in the sector such rural electrification agency and the arm in charge of high voltage transmission.

The electricity distributor in the terse 10-page confidential letter reckons that the energy regulator is in breach of the law, which requires that retail power tariffs be reviewed every year.

The firm says it has lost sales of Sh37.3 billion in the year to June due to delays by EPRA in offering the utility higher tariffs, raising the prospect of the company dipping into losses.

“While the policy regarding electricity tariff has been clear about timeline for review, it has been observed that the regulator has not been reviewing the tariffs when due as required by the law,” says Kenya Power in the letter seen by the Business Daily .

“Risk of Kenya Power defaulting on its contractual obligations if no timely and commensurate tariff is not provided.”

Kenya Power owes its key supplier KenGen Sh23.7 billion, pointing to a growing debt distress that exposes the firm to penalties for defaults.

The debt covering the period to June 2020 excludes Sh19.48 billion owed to independent power producers supplying it with electricity and Sh4.67 billion owed to the Kenya Electricity Transmission Company.

The firm recently said it had received a debt relief from 14 foreign-based lenders and had opened talks with five commercial banks to restructure its debt, which stood at Sh68.3 billion in June 2018.

Kenya Power issued a profit warning indicating the utility’s net earnings will decline by at least 25 percent of last year’s Sh262 million — which was the worst in 16 years. It last paid a dividend in 2017.If implemented, the higher tariffs will aid Kenya Power’s turnaround efforts, but hurt household budgets […]

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