Kenya Power braces for customers bill defaults

Kenya Power managing director Bernard Ngugi. FILE PHOTO | NMG

By PATRICK ALUSHULA
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Summary

• Gross electricity receivables — the value of sales that Kenya Power has made but which has not yet been paid — hit Sh23.55 billion at the end of June last year from Sh22.19 billion in the previous year.
• Kenya Power says receipts from customers have been low due to reduced consumption and payments for already consumed power, hurting its liquidity positions.
• The Covid-19 containment measures such as curfew introduced mid-March resulted in widespread interruption of commercial and industrial operations, slowing down electricity consumption.

Kenya Power expects a rise in electricity bill defaults on Covid-19-induced economic downturn that is facing customers.

The utility firm says in outlook statement accompanying the latest annual report that it expects to increase its credit loss allowances — an estimate of the debt that it is unlikely to recover from customers.

“The expected credit loss allowance on financial assets will be expected to increase due to increased difficulty by the customers to make the payments following the impact of the pandemic,” says the firm.

Gross electricity receivables — the value of sales that Kenya Power has made but which has not yet been paid — hit Sh23.55 billion at the end of June last year from Sh22.19 billion in the previous year.

Kenya Power says receipts from customers have been low due to reduced consumption and payments for already consumed power, hurting its liquidity positions.

The Covid-19 containment measures such as curfew introduced mid-March resulted in widespread interruption of commercial and industrial operations, slowing down electricity consumption.

Kenya Power says its liquidity position is likely to come under increased pressure given that obligations have remained constant mostly due to the nature of power-purchasing contracts.

The firm’s net profit plunged 92 per cent from Sh3.26 billion to Sh262 million in the year to June 2019 — the lowest profit since it returned to profitability in 2004 after the 2003 loss of Sh2.89 billion.

Delayed receipts from customers have seen the state monopoly flout the 40-day window of paying for the electricity received from suppliers such as Kenya Electricity Generating Company (KenGen).

KenGen hit Kenya Power with a Sh722.31 million financial penalty in the year ended June 2019 for delayed payments.

Kenya Power also risks a Sh1.765 billion penalty for not surrendering to the State unclaimed assets that include uncollected dividends and stale cheques as required by the Unclaimed Financial Assets Act 2011.