Kenya Energy buyer defaults hit Sh35bn

Kenya Energy staff perform restore works alongside Haile Selassie Street, Mombasa. FILE PHOTO | KEVIN ODIT | NMG

Kenya Energy’s unpaid buyer payments shot up by Sh16 billion within the yr ended June 2023, bringing buyer defaults to Sh35 billion, hurting the agency’s efforts to wean it off reliance on the Treasury.

The spike is likely one of the sharpest lately, making it one of many single-largest complications for the agency amid growing buyer numbers.

Kenya Energy sank right into a internet lack of Sh3.19 billion within the interval, underscoring how financing prices and buyer defaults have pressured it to depend on the Treasury and growth companions for funds.

Companies owned by the nationwide and county governments account for about 33 % of the unpaid payments, with the African Improvement Financial institution (AfDB) calling on the 2 ranges of presidency to settle the money owed and enhance Kenya Energy’s restoration efforts.

Learn: MPs push Treasury to launch Sh43bn energy utilities owe corporations

The AfDB is one in all Kenya Energy’s financiers.

“State companies are among the many main contributors to excellent electrical energy payments, presenting important challenges for the Kenya Energy & Lighting Firm PLC (KPLC) in sustaining its operations,” says the AfDB in its newest evaluation of the agency’s operations.

“The share of parastatals, nationwide and county governments within the total electrical energy buyer debt stands at 30 % as of June 2023. There’s a must each sort out the unpaid payments subject and safe further income streams required to make sure the sustainability of KPLC.”

The electrical energy distributor disconnects prospects who fail to pay inside 21 days after billing. It doesn’t cost curiosity on balances in arrears.

Kenya Energy additionally disclosed a three-year plan to section out post-paid meters in favour of pre-paid meters in rural Kenya to assist the corporate accumulate income upfront and considerably arrest the spike in buyer defaults.

Kenya Energy had 9.2 million prospects as of final June pushed by 318,217 new connections.

The quantity is about to proceed rising amid a number of tasks to mild up extra properties and establishments.

Learn: Kenya Energy buyer base shrinks by 11,844 within the Rift Valley

The agency elevated provisions for impairment of electrical energy receivables to Sh17.28 billion within the yr ended June 2023 from Sh14.9 billion a yr earlier than, pointing to the anticipated surge in buyer defaults which have now caught the attention of the AfDB.

Kenya Energy lately tapped debt collectors to assist get well cash from prospects who’ve since been disconnected however the surge in unpaid payments factors to restricted success of the train.

Final September, Kenya Energy sought the Treasury intervention to get well arrears owed by giant shoppers wherein the federal government has a stake and have since run into monetary headwinds, rendering them unable to pay for electrical energy consumed.

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