Kenya Power chief executive Bernard Ngugi. FILE PHOTO | NMG Kenya Power risks losing Sh16.5 billion the government owes it under the rural electrification scheme, the Auditor-General Nancy Gathungu has warned.
The debt, disclosed for the year ended June 2020, had risen from Sh11.9 billion a year before.
The receivables have been accumulating over the years and are part of a larger amount that the electricity distributor has been unable to collect from the government.
“This balance, which relates to management of the Rural Electrification Scheme on behalf of the government, is long outstanding and has accumulated over the years,” the Auditor-General warned in her report on Kenya Power’s financial statements.
“Further, it is not clear why it has taken a significantly long period to recover the outstanding amounts which are at risk of becoming unrecoverable and impaired over time.”
The rural electrification scheme was established in 1973 by the government as a partnership with the Nairobi Securities Exchange-listed utility firm with the objective of extending electricity to the sub-economic zones.
To intensify the expansion of the underdeveloped regions, the government subsequently created the Rural Electrification Authority (REA), now Rural Electrification and Renewable Energy Commission (Rerec).
Kenya Power, however, continues to operate and maintain the whole network, in addition to implementing projects for Rerec on contract basis.
The electricity distributor is entitled to retain revenues generated from customers to cover maintenance costs incurred by the company.
Kenya Power also continues to invoice the government for the expenditure incurred to complete projects but the State has been defaulting.
“In addition, the company is petitioning the government to release funds owed to Kenya Power for the management, operations and maintenance of the rural electrification scheme (RES) network. Capital expenditure has been restricted to critical projects,” the firm says in its latest annual report.Besides carrying the burden of connecting rural areas, the utility firm is also suffering as power supplied to government departments and agencies go unpaid.The National Treasury is among the government departments that have not paid a total of Sh3.1 billion worth of electricity bills.The government, which has a controlling 50 percent stake in Kenya Power, has initiated several measures aimed at easing cash flows at the company which made a Sh939.4 million net loss in the year ended June 2020.“Through a letter dated 30 June 2020, the company successfully petitioned the government to grant moratorium for payment of principal and interest on government on-lent loans amounting to Sh5.7 billion […]
