Technicians repair power lines. FILE PHOTO | NMG Loss-making Kenya Power plans to lay off an unspecified number of employees from its 10,481 workforce to cut costs as part of a fresh plan to return to profitability.
The electricity distributor says the move is informed by its current financial challenges which has affected its ability to run sustainably and deliver on its obligations to shareholders and the public.
The company is seeking a technical adviser to implement the restructuring plan, including reduction of debts, electricity theft and strategy for renegotiating bulk power purchases from firms like KenGen .
“Over the last four years, the company has experienced a general decline in its financial situation as depicted by reduced net earnings,” the company says in internal documents seen by Business Daily .
“In a bid to turn around and transform the financial performance of the company; improve efficiency and enhance customer experience, KPLC…[is eyeing] phased reduction in workforce to ensure KPLC remains competitive and provides the right levels of service.”
Kenya Power’s salaries and wages rose 9.1 percent to Sh17.4 billion in the year ended June 2020 when its workforce shrank to 10,481 from 10,914 the year before.
The jump in payroll costs came despite reduced staff numbers indicating that the salaries for those who remained on the payroll rose significantly.
Higher remuneration costs contributed to overall administration expenses rising by Sh5.6 billion to Sh26.7 billion, plunging the company into a Sh939.4 million loss in the review period.
The electricity distributor’s troubles have sucked in key constituents, including suppliers like KenGen, which has not been paid some Sh24 billion.
While the productivity of Kenya Power’s employees has improved over the years, this has not resulted in increased sales and profits.
Each of the utility’s employees served an average 723 customers in the review period –a record— and up from 643 a year earlier.Sales, however, stagnated at Sh133.2 billion. The company also suffers from poor sales collection, theft of electricity and defaults by big customers, including government ministries.Kenya Power recently hired eight debt collectors to help recover outstanding bills running into billions of shillings and improve its cash position.The retrenchment plan is one of the measures being taken to improve the financial position of the company in which the National Treasury has a 50 percent stake.The government has formed a team to renegotiate fixed charges in power contracts the monopoly signed with electricity generating companies downwards.Kenya Power also invited local and […]
