By Herbling David
In Summary
- Kenya Power stops taking applicants on board, hoping that State will allow increase of charges.
Electricity distributor Kenya Power has stopped connecting new customers to its grid, putting on hold billions of shillings worth of investments countrywide.
The company, which connected more consumers on its
grid in the past 10 years than it did since Independence, said a recent
freeze in tariff increment plans had left it without the money it needs
to connect new customers.
Consumers told the Business Daily that
the power firm suspended connections in January and has since stopped
accepting payments even from applicants it had given quotations.
The government last month rejected Kenya Power’s
bid to double connection charges to Sh70,000 from Sh34,980 and the
freeze is seen as giving the company a window to hold onto the
applications in the hope that it will be allowed to levy the new
charges.
The Sh70,000 price tag is for single-phase
applicants who are located within a 600-metre radius of a transformer. A
three-phase connection costs Sh49,080.
The freeze means that newly-constructed homes and
business premises will remain without electricity in the near term or
their owners will incur heavy expenses on diesel-powered generators or
solar power kits.
Kaburu Mwirichia, the director general of the
Energy Regulatory Commission, said he was not aware of the freeze but
added there was need to establish the actual cost of electricity
connection.
“We want to do a study to establish the connection
cost because the current figure was set long ago and is now outdated,”
said Mr Mwirichia in an interview.
“We have already developed the terms of reference
and the next stage is tendering for a consultant,” he said, adding that
the report should be ready in two months.
Efforts to reach Kenya Power managing director
Joseph Njoroge were unsuccessful as he did not reply to our queries by
the time we went to press. The prevailing subsidised connection charges
were introduced in 2004 as a strategy to deepen access to electricity.
With only one in every four Kenyans having access
to electricity, the suspension risks derailing the government’s target
of raising access rate to 40 per cent of the population by 2020.
Kenya Power adds an average of 25,000 users to the
grid every month, and currently has 2.1 million customers in its
books. In the 12 months to June last year, the power firm added 307,101
new consumers to its network.
Consumer lobby Cofek has opposed the freeze, terming it “outrageous” and “insensitive.”
“We have received reports from all over the
country that Kenya Power is not making new connections, pending the
revision of rates,” said Stephen Mutoro, the secretary-general of the
Consumer Federation of Kenya (Cofek).
“You cannot withhold a service from a consumer because you are waiting for prices to go up,” he said.
A trader from Kiambu County who only identified
herself as Wanjiru said she had applied for meter separation more than a
month ago, but Kenya Power staff informed her that they were not
receiving applications.
A businessman from Chuka, Tharaka Nithi County,
who declined to be named for fear of reprisals , said he had applied for
electricity connection for his new building in April but is yet to be
connected.
“When I visited the Kenya Power office in Chuka,
they told me to keep waiting until the head office in Nairobi issues a
directive on new connections,” he said.
Owners of buildings offering office space,
go-downs and manufacturing premises will be hardest hit by the hitch as
they cannot get tenants for their properties.
Two weeks ago, Deputy President William Ruto
stopped Kenya Power from raising electricity costs, calling on the firm
to sort out operational inefficiencies and power losses.
Kenya Power wanted to more than double electricity
charges for domestic users consuming less than 50 kilowatts per month,
who were to pay Sh5.10 per kilowatt-hour from the current Sh2.00 per
kilowatt hour. It also wanted to increase the monthly fixed charge to
Sh250 from Sh120.
Households consuming between 50 and 1,500Kwh would
see their energy costs rise to Sh11.90 from the current Sh8.10 for each
unit of power consumed.
The electricity distributor last reviewed power
tariffs in July 2008 and had applied to the ERC for approval to raise
the rates in June 2011 but later re-launched the bid in February this
year.
The power distributor argues in its application
that the amount set in 2004 is no longer viable due to the increase in
costs of connection.
“Since then, the cost of materials, labour and
transport have significantly increased,” Kenya Power said in its
application to ERC.
“Kenya Power proposes that this deficit is partly
raised through a charge to electricity consumers of Sh0.70 per KWh and
upward adjustment of the connection fees.”
The utility firm argues that since the
installation charges were set nine years ago, the cost of copper and
aluminium cables have more than tripled and transformer prices doubled
while fuel costs are up 47 per cent and pole prices are up by 45 per
cent.
As a result, Kenya Power has been left to absorb
the difference in connection costs and actual costs that grew threefold
in the past three years to Sh7.5 billion in the year to June 2012.
The ballooning deficit is likely to take a heavy
toll on the firm’s bottom line. Kenya Power expects its pre-tax profits
to drop 53.4 per cent to Sh3.9 billion in the current year ending June
compared to Sh8.5 billion in a similar period last year if the tariff
reviews are blocked.
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