Power defaulters face court action over Sh8bn debt

A Kenya Power employee at work. The firm has threatened to sue defaulters from next week. File 

By BD REPORTER
 

 

Defaulting electricity consumers face court action as Kenya Power moves to recover bad debts estimated at Sh8 billion.

The power distributor has sent a notice to disconnect private companies, parastatals and households from the electricity grid next Monday, paving the way for legal action against customers who fail to pay three months after the cut off.

Kenya Power’s unpaid bills stood at Sh8.02 billion in the year to June 2012, down from Sh9.2 billion a year earlier, which was nearly double its full- year net profit of Sh4.6 billion.

The aggressive pursuit of defaulters comes as the utility firm seeks additional cash to compensate for the freeze on planned increases in electricity tariffs.

The halting of the tariffs is expected to put a strain on Kenya Power’s profit margins and the firm’s ability to revamp its ageing electricity network.

“The accounts’ closure will happen if the disconnection is done and there is no payment within three months. The legal process will be pursued thereafter,” said a Kenya Power executive on condition of anonymity since he is not authorised to speak for the firm. Large power users, including manufacturers, lead the list of defaulters at Sh4.4 billion from Sh6.2 billion, followed by ordinary customers whose debt stands at Sh2 billion from Sh1.5 billion.

This means that defaults within households have deepened despite a drop in overall debt. Parastatals are third with Sh1.18 billion, up from Sh1.14 billion. The combined bill of ministries and local authorities increased to Sh281 million from Sh150.4 million.

(Read: Kenya plans Sh200bn expansion of power grid)


“This notice applies to all customers including government departments and agencies, county authorities, industries and domestic customers,” reads the Kenya Power notice.

The Sh8 billion debt was arrived at after the utility, which is owned 50.08 per cent by the government, noted that Sh3.8 billion was unlikely to be recovered.

Kenya Power requires all its customers to deposit an amount equivalent to two times their monthly consumption to cover against the risk of default, with the minimum being Sh2,500.

But defaulters often consume beyond their deposit, leading to an increase in the doubtful debts. Customer deposits stood at Sh6.2 billion in June last year.

The company had 2.1 million households connected to the national grid by June compared to 1.75 million a year earlier and 1.46 million in 2010.

 Consumers living outside the 600-metre radius of a transformer will pay more to be connected to the electricity grid as Kenya Power seeks new revenue channels.

Read: Power connections set to cost more)




Kenya Power has been levying a fixed charge of about Sh34,980, for electricity connections under subsidised rates introduced in 2004 as a strategy to deepen access to electricity.

On May 9, Deputy President William Ruto stopped the firm from raising electricity tariffs, instead directing it to sort out operational inefficiencies and power losses.