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Tuesday, January 25, 2022

Kenya Power in the spotlight after nationwide blackout

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The hashtag #KPLC has been trending on Twitter this week as Kenyans share memes and gifs about the country’s worst national blackout for years.

While some tried to find humour in the midst of the darkness, others lamented the inefficiency of the state-run Kenya Power Lighting Company.

It was the third nationwide blackout in four years, raising concerns about KPLC’s ability to provide a stable power supply.

The company said in a statement that four pylons supporting the power line, which connects Nairobi to a hydroelectric dam in the central region, had collapsed. According to the report, vandalism had weakened the structures.

Sabotage or plain failure?

The cause of the blackout is being investigated by police, with the head of criminal investigations telling journalists that they can’t rule out anything, following concerns about possible sabotage following reforms at the energy ministry that were seen to irritate bureaucrats.

President Uhuru Kenyatta appointed Monica Juma and her assistant Gordon Kihalangwa to the ministry in September 2021 to push through the reforms, which have resulted in, among other things, a 15% reduction in the cost of electricity.

In the absence of electricity, many Kenyans have had to resort to candles

Later, Mr Kihalangwa told lawmakers that heads would roll at Kenya Power for alleged crimes committed during the drafting of Power Purchase Agreement (PPA) contracts. A typical power purchase agreement pays a producer for any electricity generated, even if Kenya Power is unable to sell it due to surplus supply.

According to the BBC, heads of various ministries’ departments and corporations have been forced to resign, with others opting for early retirement. There have been no charges filed.

A presidential taskforce on power purchase agreements recommended that independent power producers reduce Kenya Power’s tariffs by half in order to match KenGen’s prices. It also suggested that all power purchase agreements that were still being negotiated be halted.

The reduction in power costs and the review of power purchase agreements would result in less revenue for Kenya Power, in which private investors own 49.9 percent.

A struggling monopoly

The list of KPLC’s annoyances is long, including constant outages, slow restoration of power, exorbitant electricity bills, and lengthy wait times to connect potential clients. It’s no surprise that it’s been given names like “Kenya Paraffin and Candles Limited.”

Kenya Power has also been sinking in debt, with financial disclosures indicating a company that relies on debt to operate. It has borrowed money from organisations such as the International Development Agency (IDA), China Exim Bank, and the Japan Development Bank. The loans are guaranteed by the state and, as a result, are repaid by taxpayers in the event of default.

Its procurement procedures have also been investigated, with one preliminary audit report revealing that it held approximately $85 million (£63 million) in deadstock – items such as power cables, metres, and transformers that had sat in warehouses for more than five years without being used.

Critics have also accused the company of acting monopolistically, claiming that it strangles other market players by limiting their distribution capacity to very small areas.

Counting the losses

The power outage on Tuesday occurred at a time when the Energy and Petroleum Regulatory Authority (Epra) is attempting to compel electricity companies to compensate customers for financial losses, equipment damage, physical injuries, and death caused by outages.

Kenya Power currently compensates for injuries and damaged equipment but does not pay for financial losses caused by power outages.

Although losses from Tuesday’s outage have yet to be calculated, it is clear that many businesses reliant on electricity – including industries and small businesses like welding shops and salons – suffered significant losses.

Sellah Anyango, who owns a salon in Nairobi, expressed her dissatisfaction to the BBC.

“Because there was no power, I had customers come and go. The company has already suffered losses as a result of the coronavirus pandemic. What is this? With such disruptions, how will we pay our rent and salaries? That is completely unacceptable.”

The move towards solar

Kenya Power has been shaken by a growing shift toward solar power systems by industries looking for a more reliable and cost-effective supply. The company acknowledged that some of its industrial customers, who account for approximately 55% of its sales revenue, were transitioning to self-generated solar power.

Many Kenyans are switching to solar power

Africa Logistics Properties (ALP), Mombasa International Airport, and the International Centre of Insect Physiology and Ecology (Icipe) are among the large power consumers that have recently installed solar power units on their properties.

Several other businesses, universities, and factories have turned to grid-connected solar photovoltaic systems to supply power for internal use.

According to official data released last year, the use of solar power has increased. Solar lighting is used by approximately 2.3 million households, accounting for approximately 19% of all homes.

Kenya Power is hoping to get a piece of the solar pie and has announced plans to enter the market. It stated that it will scout for customers interested in having solar panels installed on their rooftops and will hire private firms to do the work under a design-build-finance-and-operate (DBFO) model.

Kenya Power would then sell the generated electricity at a reduced rate to the owners of the homes and office buildings that house its solar plants.

Kenya Power will be forced to adapt as the country transitions to solar energy, or it will be rendered obsolete and cast into the darkness.

 

SourceBBC
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