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Kenya Power turnaround efforts take toll on workers

 

Kenya Power Acting Managing Director Rosemary Oduor addressing the media during a briefing of the KPLC audited financial result for the half-year period ended December 31, 2021 at Sarova Stanley Hotel in Nairobi on March 2, 2022. [Boniface Okendo, Standard]

Kenya Power workers are facing increased pressure as its management institutes reforms to pull the firm from the brink.

The company’s Managing Director Rosemary Oduor acknowledged the toll on workers even as the firm bounced back with a net profit of Sh3.82 billion for the six months to December 2021.

“The drive has pressure on the employees; they have to keep being encouraged to keep going strong,” she said yesterday after the firm’s half-year investor briefing.

“From an employee, individual expectation is that the profit improves today then their remuneration must also improve…so we must manage that expectation.”

The firm’s headcount now stands at about 9,800, with 500 jobs having being shed within a year. The attrition led to a drop in staff costs by 8.6 per cent to Sh8.2 billion in December 2021 from Sh9 billion the previous year.

Managing costs is among Kenya Power’s core restructuring areas with others being growing sales, increasing revenue collection, enhancing system efficiency and improving customer experience.

This is ahead of a proposed voluntary early retirement (VER) exercise that could send home up to 2,000 workers.

Ms Oduor declined to disclose the progress of the exercise, terming it “prematurely leaked.”

“That plan unfortunately leaked out prematurely…at this point we can’t divulge the finer details. It hasn’t even been considered into conclusion,” she told reporters.

The Sh3.8 billion profit, a huge improvement from Sh138.36 million it made over a similar half in 2020, was attributed to increase in sales, enhanced system efficiency, lower operating costs and collections from big customers.

On the lowering of power prices, Kenya Power Chairperson Vivienne Yeda said the high charges were due to high energy costs at the contracting stage, fuel and foreign exchange adjustment, pass-through charges and government taxes.

“It should also be noted that KPLC has not increased its tariffs since November 2018 and has instead reduced it by 15 per cent,” she said.

“The cost structure within the sector is lop-sided with the suppliers and IPPs (independent power producers) consistently reaping windfall profits with high returns on equity while KPLC and its consumers underwrite all the risks, expenses and losses.”

Oduor said in-depth renegotiation on power purchase agreements were soon taking off as part of the reforms.

The Kenya Power turnaround was initially aimed at helping it get out of losses but has since last year become part of sector-wide reforms, which were largely informed by findings and recommendations of the Presidential Taskforce on the Review of Power Purchase Agreements (PPAs).

The taskforce recommended a 30 per cent cut in cost of power that is being implemented in two tranches, the first already in effect and second one expected this month. 

It also recommended the review of PPAs that Kenya Power has with power producers, which are seen as among the ways to reduced cost of power, which the MD said were ongoing.