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Kenya Power bosses say major reforms to reboot utility firm

BUSINESS
By Wainaina Wambu | December 4th 2021
By Wainaina Wambu | December 4th 2021
BUSINESS

Kenya Power Board Chair Vivienne Yeda (left) and Acting CEO Rosemary Oduor during the company’s 100th Annual General Meeting in Nairobi. [Courtesy]

Kenya Power is set to start on a “clean slate” through the overhauling of key processes such as procurement and asset disposal as part of the ongoing reforms aimed to rescue it from the brink.

The firm’s chair Vivienne Yeda said dirty procurement scams and unviable projects had run down the power utility firm, and in turn, shifted the burden to electricity consumers. This, she noted has denied shareholders returns for many years.

“Unfortunately, your company had become a gravy-train for all and sundry a vehicle for all sorts of untenable and unviable projects, operational and procurement schemes and scams that ended up draining Kenya power’s resources,” Yeda told shareholders during the firm’s 100th Annual General Meeting (AGM) in Nairobi yesterday.

“The financial and economic cost of the over procurement of overpriced and poor quality goods and services is borne by you the shareholder, owners of the company and the wananchi who need power.”

“This is the reason shareholders haven’t received dividends for many years and also the reason why KPLC and wananchi are paying through their nose for electricity which should be readily accessible by all,” she said.

Yeda, who’s been heading the board for 18 months now, said they would “liberate” the giant utility firm through the implementation of a stringent cost-management policy anchored on return on investments and prudent purchase of equipment as well as engaging with ethical partners.

“We have to start on a clean slate with the development of standards, specifications, and procurement frameworks that ensure we get the highest quality of goods and services,” she said. This is as the firm sought shareholder approval to review past audits on ex-senior executives on financial dealings that have cost it billions of shillings.

Yeda said the reforms will increase procurement efficiency and the quality of equipment, consultants, contractors and further simplify procurement procedures with more flexibility, transparency and the use of technology.

Auditor General Nancy Gathungu in her latest report revealed the procurement challenges at Kenya Power with an audit review on IT systems revealing weak monitoring processes that pose risks to the firm.

Yeda said Kenya Power had initiated “long overdue IT reforms” seeking to improve billing, institutional procurement, treasury operation and human resources activities.

She said the review of Power Purchase Agreements with Independent Power Producers (IPPs) was ongoing to end the lopsided deals. “Let me make it clear that KPLC is not at war with IPPs. On the contrary, KPLC is keenly aware of the unsustainability of the terms and conditions of the existing PPAs,” she said.

The government recently appointed a committee to oversee planned reforms at Kenya Power, which it had declared a special State project. The State promised to bring down electricity prices by 33 per cent by the end year.

The PPAs were blamed for the high electricity costs in the country. “It should be obvious that it is not in either party’s interest … for the terms of PPAs to be so imbalanced as to endanger the existence of any player,” said Yeda.

“In the current framework, IPPs continue to record stellar profits and dividends while your company, the sole off-taker and the wananchi struggle to make ends meet.”

The firm’s turnaround is anchored on customer experience, reducing the cost of electricity, enhancing sales growth, increasing revenue collection, prudent cost management and reducing system losses.

Kenya Power Acting Chief Executive Rosemary Oduor said the turnaround was bearing fruit in light of the firm’s performance and attributed it to an increase in sales, as well as a decrease in operating, and finance costs.

“The business is reinventing itself to become more responsive to customer needs,” she said.

Kenya Power reported a net profit of Sh1.49 billion in the year to June 2021, an improvement from a loss of Sh939 million posted in a similar period last year.

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