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In the dark: Last mile project dims Kenya Power amid customer woes

FINANCIAL STANDARD
By Macharia Kamau | Nov 15th 2021 | 4 min read
By Macharia Kamau | November 15th 2021
FINANCIAL STANDARD
Kenya Power workers fix a distribution transformer. [File, Standard]

The last mile project, it appears, is Kenya Power’s Achilles' heel, throwing more challenges to the firm every financial year.

The project, which aims at increasing electricity connectivity to achieve universal access by 2022, has over the years dented the power distributor, partly due to heavy investments in its network. 

But while the toll on the company’s resources is evident, the project has little value in terms of returns.

The Auditor-General has now raised concerns about major weaknesses and governance lapses in the implementation of the project.

Issues of concern varied from contractors being absent from site, to failure by Kenya Power to engage communities and regulatory agencies, and thousands of customers who have been buying tokens but cannot use them because of faulty meters.

In the audit report on Kenya Power’s financial year ended June 2020, the Auditor General said the last mile project contracted some firms with questionable expertise to undertake jobs such as expansion of network and installation of meters.

Their output was shoddy, forcing Kenya Power to terminate some of the contracts and incur losses.

The Auditor General said one of the firms that Kenya Power contracted to supervise meter installation was not present in the field when an audit of the project was undertaken.

“The company procured consultancy services for supervision and management of civil works and installation of meters at a cost of Sh274.38 million,” said Auditor General Nancy Gathungu in the report, adding: “However, site visits by the audit team revealed no evidence of the consultants’ personnel’s presence at those sites, raising doubt on whether they had been deployed as per the contract.”

Also of concern for the Auditor General was that numerous Kenyans connected to the grid in the course of last year under the project did not have access to power.

This was due to faulty prepaid meters, with many customers paying for electricity and getting tokens but could not load them in the Consumer Interface Units (CIU).

“Single prepaid meters procured from a Chinese company at a cost of $10 million (Sh1.09 billion) and installed at customers’ premises were not vending even though they had been activated by the contractor, thereby implying that customers were purchasing tokens but the CIU were not picking the tokens and thus had no access to power,” said the auditor general.

“Other meters have taken as far as three years without vending.”

Kenya Power, in its annual report this year, announced an increase in the amount owed to consumers for prepaid units bought but not utilised.

The firm said it owed Sh263.1 million to prepaid electricity consumers, who had purchased tokens but had not utilised them, by the end of the financial year to June 2021.

This was a growth from Sh245.9 million it owed such consumers as at June 2020.

“Prepaid revenue represents unearned income on prepaid meters. Based on historical trends, management derives an estimate of the value of prepaid power units not consumed as at the end of the financial year,” the firm said.

Consumers are among various clients – including power producers – owed money by Kenya Power totalling Sh91.5 billion as at June 2021.

Ms Gathungu said there was lack of public participation in the communities targeted by the last mile projects.

This, in turn, led to the project suffering lack of project ownership among members of the public and in effect hampering implementation.

Kenya Power also failed to consult other government agencies charged with overseeing the electricity sector.

These include the Energy and Petroleum Regulatory Authority and the Rural Electrification and Renewable Energy Corporation.

The omission led to duplication of projects, said the Auditor General. The firm did not supply documents and reports essential to the implementation of the last mile project, without which it would be flying in the dark.

“Documents that are key to procurement of services and works including feasibility studies and surveys, progress reports for projects, technical specifications, bills of quantities and architectural drawings and environmental and social impact assessment reports were not provided for audit review,” said the audit report.

The challenges that the Auditor General highlighted in the report are in addition to the myriad problems that have cropped up over the years as the company implemented the project. 

Though the project has led to significant growth of the number of people connected to the grid, currently at over 8 million from about 2 million in 2013, the new customers are a major challenge for the company as their consumption is minimal.

Analysts have in the past said the new consumers have neither contributed much to the growth in demand for electricity nor in building up Kenya Power’s revenue base.  

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