According to recent reports, the Kenya Power And Lighting Company (KPLC) will now be a beneficiary of an 86.95 billion Kenyan Shilling government loan. The loan has been sourced from two (2) international lenders in a bid to help achieve a change in fortunes for the company.
Documents from the National Treasury which have been brought before the Kenyan Parliament revealed that on the 18th of March 2022 the East African nation of Kenya, received 230 million United States Dollars (which is around 26.667 billion Kenyan Shillings) from the International Bank for Reconstruction and Development (IBRD) and 520 million United States Dollars (which is around 60.29 billion Kenyan Shillings) from the International Development Agency (IDA).
The Kenya Power And Lighting Company (KPLC) did not however reveal the specific amount that the Kenya Power And Lighting Company (KPLC) will receive, stating that the funds will be channeled towards bolstering the finances of the utility company.
It is feared that in the current financial year, the Kenya Power And Lighting Company (KPLC) could experience a significant hit of as much as 26 billion Kenyan Shillings as a result of the fifteen (15) percent slash on the power tariffs, resulting in the Kenyan government stepping in to ensure that the company remains profitable and does not feel the effects of the power tariff slash.
The Kenya Power And Lighting Company (KPLC) also requires funds to refurbish its transmission network in order for it to meet up with the increasing demand. It is also anticipating monetary cushions due to the anticipated impact the fifteen (15) percent slash in the cost of electricity, would have on its revenues.
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The National Treasury through the documents stated that, “The purpose of the loan is to provide financing in support of the program whose actions include electricity sector and PPP reforms to strengthen the cornerstone utility (KPLC).”
The management of the Kenya Power And Lighting Company (KPLC) made it known that the fifteen (15) percent slash on power tariffs that was implemented in January of 2022 will result in it losing as much as 26 billion Kenyan Shillings in revenues. The estimate does not however, include the additional fifteen (15) percent slash which is slated to be implemented before the end of June of 2022.
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In the words of the Kenya Power And Lighting Company (KPLC) back in March of 2022, “The 15 percent power reduction if you look at our last year’s financials, the top line was Sh144 billion, then do 15 percent of this you will end up at Sh25 or Sh26 billion. A 15 percent tariff reduction on the end-user will be in that region.”
The Kenya Power And Lighting Company (KPLC) experienced a change in its fortunes when its net income grew by 27.6 times to arrive at 3.8 billion Kenyan Shillings in the six (6) months until December of 2021 from the 138 million Kenyan Shillings that was the case the year before. It is expected that the full extent of the fifteen (15) percent slash will be seen in the company’s full year performance.
The Kenya Power And Lighting Company (KPLC) needs more funds to improve its systems, meeting the growing demand from a corresponding growth in user numbers, and also reduce the consistent blackouts which have been as a result of its maturing infrastructure.
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In the six (6) months leading to December of 2021, the utility company registered a growth of 317,296 more customers. This pushed its overall client base to a total of 8.59 million users up from the 8.27 million total users that was the case in June of 2021.
In 2021, the Kenya Power And Lighting Company (KPLC) had to write off 15 billion Kenyan Shillings in bad debts from electricity bills which had been unpaid. Most of the unpaid electricity bills had been that way for more than three (3) months.
Kenya Power And Lighting Company (KPLC) which is a power distributor owned by the Kenyan government has in recent times, lost billions of Kenyan Shillings. This is reportedly because it (the Kenya Power And Lighting Company (KPLC)), distributes electricity before carrying out collections.
Households and users of electricity in Kenya are among some of the top defaulters on the list with about sixty (60) percent of the total electricity bills owed. Of the total number of domestic customer owing, ten (10) percent were commercial and twenty (20) percent were Small and Medium-sized Enterprises (SMEs).
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