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Kenya Power prepaid customers hit 2.3m

By Macharia Kamau | January 30th 2017 at 00:00:00 GMT +0300

A drop in unpaid bills encouraged Kenya Power to completely phase out post-paid meters. [PHOTO: FILE]

The number of electricity consumers on prepaid metering now accounts for almost half of Kenya Power's customers.

This follows an aggressive push by the utility firm in its bid to reduce operating costs and defaults rampant among post-paid customers.

The firm increased the number of prepaid customers by almost a million last year to 2.3 million customers during the financial year to June 2016.

This translates to 47 per cent of the 4.89 million customers that Kenya Power had at the close of the year.

The push is in a bid to cut down operational costs that come with reading post-paid meters, where the firm requires staff to read all the metres every month to give consumers accurate bills.

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Prepaid metering is also an attempt to reduce defaults by customers, which reached Sh12.4 billion by June 2016.

"To further enhance our revenue protection measures, we stepped up installation of prepaid meters to new domestic and small commercial customers. As at the end of the year under review, we installed 985,487 prepaid meters, bringing the total prepaid accounts to 2,317,228," said Kenya Power in its annual report.

Prepaid metering was also aimed at arresting growth in the amount owed to Kenya Power by its defaulting customers.

The total amount owed to Kenya Power in unpaid bills had ballooned to Sh12.4 billion by the end of the financial year to June 2016, having almost doubled over the 10-year period since 2006 when it stood at Sh6.5 billion.

At Sh12.4 billion last year, the money owed by customers was 64 per cent more than the net profit for the year, which stood at Sh7.55 billion.

According to its annual report, the largest defaulters are the large power users – mostly businesses - which owed the company Sh7.68 billion by end of the last financial year. Parastatals also owed the firm a staggering Sh1.24 billion.

Critical to the growth of power consumers on prepaid metres are informal settlements.

Kenya Power connected 773,824 new customers in informal settlements during the year to June 2016, who accounted for more than 50 per cent of the company's 1.28 million new customers over the period.

In addition to being a significant contributor to the number of customers, the firm said it expected the mainstreaming of power connections in informal settlements to drive down illegal connections and subsequent financial losses.

Kenyans living in informal settlements are being connected to the grid through the World Bank-funded Global Partnership on Output-Based Aid (GPOBA) programme.

"The GPOBA electrification project provides safe, legal and affordable power connections to households in urban, peri-urban and rural areas as part of initiatives to increase electricity access across the country," said Kenya Power.

"In the year under review, we implemented 1,277 schemes to connect 773,824 new customers at subsidised rates under the GPOBA programme. The project has enabled the company to reduce commercial losses resulting from illegal electricity connections while enhancing access and improving safety for slum dwellers."

The firm started implementing the GPOBA programme in 2015 after an agreement with the World Bank's International Development Association (IDA) where the utility firm would be the administrator.

Under the agreement, Kenya Power pre-invests its own resources to provide electricity to informal settlements after which IDA reimburses it for every connection done under this project.

"The facility comprised a $10 million (Sh1.03 billion) IDA loan and $5.15 million (Sh530 million) grant to be used as a subsidy for eligible electricity connections, allowing low income households to pay Sh1 160 per connection," said Kenya Power.

"The receivable amount of Sh1,114,756 is due from customers who received electricity connection under this project. The company automatically recovers Sh100 from these customers every month to recover the Sh1,160 awarded to each customer."

 


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