Kenya Power, an anatomy of economic sabotage and glaring, shameless impunity

Kenya Power

Kenya power workers fix power transmission poles. 

Photo credit: File | Nation Media Group

 In mid-May this year, the Nation got a complaint from a horticultural farmer in Nakuru. Kenya Power, the electricity utility, had sent the farmer a bill of Sh709,964 for one of the meters on his farm.

The farmer had already made two payments: one of Sh450,000 and Sh122,000 but there was a claimed accumulated balance brought forward of Sh872,012 as well as a fresh monthly bill of Sh409,952.

Even for a big farm, these are big bills and in no way reflect the consumption of power on the farm. The inaccurate billing aside, there were charges built into the costing that were not just unfair, but plain sabotage of business. There was the usual Forex adjustment, inflation adjustment, ERC levy, REP Levy, Warma Levy, VAT and rounding charges, the whole kit-and-caboodle of shortsighted and destructive taxation. But there was also a Fuel Energy Cost of Sh320,866.

A farmer competing against Ethiopian and Israeli farms, where the cost of power is only a tiny fraction of what he pays and where efficiencies in the economy and incentives abound, fights daily not to prosper, but to just to keep the farm open.

The timing of the demands for payments, at the height of the Covid-19 crisis, and the insistence on the payment of all charges, fees and levies on top of the plain cost of power consumed, also showed a level of insensitivity that was surprising.

50 million people

Covid-19 crushed the market for imported horticultural produce in Europe, especially flowers. Kenyan farmers were fighting just to keep farms open, to avoid the massive costs of waking up comatose production systems.

They were not so much productive units but charity works keeping workers and their families alive as well as those of their other suppliers. The entire economy, low on fuel and manned by an exhausted crew, was flying a patient, holding pattern, waiting for a break in the weather to execute a safe landing for 50 million people in very uncertain times.

For Kenyan businesses and families, the activities of corrupt parastatals during these times is akin to switching off navigational aids in an emergency.

Why are the energy costs of a country endowed with natural, renewable power so high? Kenya Power buys 25 per cent of its power from small, independent power generating companies. Some 72 per cent of the power comes from KenGen, the bulk of it hydro and geothermal.

However, those small companies account for 47 per cent of the total power purchase cost, KenGen is paid the other 48 per cent. Is it that KenGen does not have the capacity to ramp up power production to bring down the cost of energy?

KenGen may have the capacity to supply all our needs, but it can’t do so: The power purchase agreements that Kenya Power has signed with IPPs, being by their very nature emergency type agreements, compel Kenya Power to pay for the electricity generated by IPPs whether it uses it or not.

Currently, there are 32 power agreements in operation, 35 fresh ones have been signed and 113 are being negotiated. In other words, your money is going to pay for diesel generated electricity which the country does not really need. And more of that very expensive power is being lined up.

And these are not the only schemes in operation. The purchase of junk equipment which has to be replaced at great costs every now and then, the purchase of more goods than required so that the company has an estimated Sh8 billion of inventory, the possible supply of air and other tricks has been going on.

Well-heeled criminals

The activities at Kenya Power go beyond simple economic crime: they constitute large-scale and sustained sabotage of the economy and the welfare of millions of citizens. How did it get so bad? And when this was happening, where was the responsible minister and his officers? Where was the government? And President Uhuru Kenyatta? And Deputy President William Ruto?

The truth of the matter is that it is not ordinary people who have been benefiting from this insanity. It is big people, their families and cronies. And as usual, justice will likely not be served.

There is no good reason why President Kenyatta and his government cannot clean up Kenya Power and severely punish the persons involved in its mismanagement, it is not as if he is seeking re-election and needs the votes of the well-heeled criminals profiteering at public expense.

First, there must be 100 per cent disclosure of the individuals involved, including senior government officials, governors and family members and associates of people in government. Secondly, there must be total accountability, including serious jail terms and asset recovery.

Thirdly, the energy sector must be rebuilt from the ground up, and, finally, there should be an audit of damages caused to Kenyan businesses and compensation paid to those, such as the Nakuru farmer, who suffered needless damage at the hands of a corrupt public entity.

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