Kenya Power, Mumias lock horns over bills

Kenya Power and Mumias Sugar Company are locked in a battle over unpaid electricity bills that could see the latter halt its energy-generating business. PHOTO | FILE 

In Summary

• Electricity distributor is demanding millions of shillings from sugar miller but the latter says the former is yet to settle its account as per the terms of an energy deal signed between the two

By IMMACULATE KARAMBU
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Kenya Power and Mumias Sugar Company are locked in a battle over unpaid electricity bills that could see the latter halt its energy generating business.

Though details on the amount owed remain undisclosed, both firms admit that they owe each other.

Kenya Power is demanding millions from Mumias for power consumed by the firm. On the other hand, Mumias, which supplies part of the 36 megawatts it generates to the electricity distributor, says the utility firm is yet to settle its account as per the terms of the power purchase agreement signed between the two.

“Mumias owes Kenya Power more than what they are claiming from us. They (Mumias) have not been consistent in producing power as per the agreement and for this, it has even attracted penalties,” said Migwi Theuri, Kenya Power’s spokesman.

Kenya Power disconnected electricity supply to Mumias alongside government institutions such as prisons, about two weeks ago.

Mumias’ finance director John Mbogo said the firm is currently relying on diesel-run generators for power. The sugar plant is currently closed for routine maintenance.

Production cost

But should the factory be opened before Kenya Power reconnects electricity supply, the situation could pose a challenge to sugar production. The cost of manufacturing may go up and consumers may be forced to dig deeper into their pockets.

“We are relying on backup facilities at the moment because we are closed for maintenance. We use a lot of electricity to start up the factory hence we hope that by the time we open for operation, we will have found a solution,” said Mr Mbogo.

In addition to the disputed dues, Mumias is also complaining that Kenya Power bills it under the domestic tariff, which is often higher than the industrial one, an allegation that the utility firm denies.

It is understood that Mumias and Kenya Power have for a long time disagreed over the said tariff with the latter insisting that Mumias is categorised as an industrial consumer.

Information obtained by the Smart Company from Mumias shows that the miller claims that it is charged Sh40 million for electricity used to start up its factory, which is done once per week.

Kenya Power categorises customers depending on the size of their demand and the type of voltage used to supply energy to them, among other variables.

Mumias also wants Kenya Power to cut the penalties slapped on it for failure to supply electricity to the grid saying the charges are “too high.”

According to the miller, Kenya Power buys a unit of electricity at six US cents and charges about 20 US cents per unit if the power is not delivered.

The price at which Kenya Power buys electricity from generators varies depending on how firms negotiate under the power purchase agreement.

As a result of the hitches in payment for electricity, Mumias is now considering quitting power generation, a venture it adopted to cushion itself from competition arising from cheap sugar imports from the Comesa region. Mumias also manufactures water and ethanol to diversify its sources of revenue.

“We got into cogeneration because the Comesa quota was being lifted and it was expected that sugar millers will diversify into other revenue streams. The current circumstances may force us to re-think this business,” said Mr Mbogo by phone