Kenya Power Company employees carry out repairs to a transformer on Haile Selassie Road Mombasa in this photo taken on December 5, 2020.
| Kevin Odit | Nation Media GroupBusiness
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Kenya Power’s huge connection costs leave thousands groping in the dark
In 2010, a group of Kitui County residents approached Kenya Power, seeking to be connected to the national grid.
Kenya Power was at the time rolling out a donor-funded programme to connect rural communities to electricity.
“We applied for power as a community under the programme. However, the company just kept taking us round in circles,” Mr Timothy Kiiva, an engineer who was working for Kenya Pipeline at the time, narrates.
Mr Kiiva said only 50 people were needed for a group to qualify and Kithunzi village, Kalimani location in Matinyani had more than 150 households.
At the time, Kitui was under Kenya Power’s regional office in Thika.
He claimed Kenya Power officials demanded Sh120,000 in “facilitation fees”, but his village was not ready to pay the money.
“After sometime, we realised our reference number had been used to supply power to a different village instead,” Mr Kiiva told the Nation.
He recalls that sometime in 2019, after appeals to various offices, including the Ethics and Anti-corruption Commission went unanswered, the villagers installed a 25kw solar and wind hybrid system at a cost of Sh1.95 million, which supplies all the affected households with clean, free and reliable energy.
Renewable energy projects
“We took advantage of import duty waiver on renewable energy projects and imported the panels. I connected as many homes as I could,” he said.
Recently, however, he got a call from the Energy and Petroleum Regulatory Authority (Epra), which accused him of running an illegal connection.
“Now Kenya Power has reported our endeavour to Epra and asked them to dismantle our power generation plant. I know the law, having worked as an electrical engineer for Kenya Pipeline for many years. As long as it generates less than 1MW and it’s not being sold, then it cannot be an illegal connection,” Mr Kiiva said.
His experience is shared by many other Kenyans who continue to wallow in darkness after the utility firm either refused to connect them or just keeps giving them impossible quotes, some inflated more than 10 times.
The irony of it all is that the firm has excess power that is going to waste, yet it would rather sink deeper into losses than connect customers who are willing to pay for their consumption.
Consumers have also been complaining about high cost of poles and cables.
“I have never understood why Kenya Power would charge me Sh100,000 for one pole in order to connect me to the national grid,” Mr John Wamai said in an email to the Nation.
Mr Nyamai has had to contend with darkness due to the heavy costs, yet Kenya Power buys treated poles from the market at less than Sh10,000 apiece.
In Murang’a County, Mr John Magiro set up a mini hydroelectric station to supply power to his village, which was 15 kilometres from the nearest connection to the national grid.
The young entrepreneur used an old bicycle dynamo and scrap metal to actualise his dream of powering his village.
So far, he has managed to connect more than 1,000 homes and businesses spread over 28 kilometres in his village to electricity.
His firm charges Sh200 per month irrespective of how much electricity they consume.
For his part, Mr Kaggillos Elijah wishes he was in a position to set up his own power plant, as steel billionaire Narendra Raval reportedly did after being disappointed by Kenya Power.
“KP has made things difficult in virtually all the sectors. I run a school where we used to pay about Sh20,000 per month. But out of the blue, I was slapped with a Sh280,000 bill. Kenya Power gave me no room to negotiate or dialogue over this bill. The only option was to pay,” he says, adding that he was told he had been paying bills based on estimates.
Meter readings
“They don't take the meter readings. When we send our readings, we still get their estimates. They then disconnect the power and you have to pay an additional Sh4,000 for reconnection,” he said, adding that he was considering going the solar way.
“According to our meter readings, we've been paying Sh23 per unit, which can go up to 130 units a day. They have now installed a card meter that consumers cannot access. Now they just send us bills from their offices whose authenticity we cannot ascertain,” he noted.
The Nation learnt that the task force on reforming Kenya Power, led by Mr John Ngumi, has recommended cancellation of all the expensive contracts KP has with Independent Power Producers (IPP).
“One of the recommendations is to cancel all these contracts that do not make business sense. It is cheaper to cancel them and even go to the international courts of arbitration,” a source familiar with the report said.
Questions abound on whether the regulator is complicit in the exploitation of Kenyans or does not perform its functions independently.
Those who opt for solar and wind power are now charged at the Feed-In-Tariff rate, rather than market-driven tariffs, at a time when the costs of wind and solar technologies are falling globally.
The cost per kWh of Solar Photo Voltaic (PV) technology has fallen by more than 50 per cent in the last decade globally.
A number of countries have recorded very competitive solar-PV tariffs; for instance, South Africa (6.40 US¢/kWh), Zambia (6.02 US¢/kWh), Nigeria (8.10 US¢/kWh), India (7.00 US¢/kWh) and Brazil (8.00 US¢/kWh).
This reduction in tariff is largely due to adoption of an auction system for solar-PV and wind power projects.
This model had been agreed upon in principle as the way forward for Kenya. In 2016, the Energy Cabinet Secretary articulated the shift to an auction system for renewable energy plants in order to provide a transparent, competitive and non-discriminatory process.
Burden consumers
Accordingly, the then Energy Regulatory Commission, now Epra, while approving the Power Purchase Agreements (PPAs) for solar PVs, recommended the existing tariff of 12 US cents per kWh should apply for a maximum of two years, after which the tariffs would be renegotiated.
This was done to avoid a situation where consumers pay a tariff of 12 US¢/kWh for the 20-year life of the Power Purchase Agreement when the market rate was 60 per cent of that, say 7.5 US cents per kWh.
To demonstrate how bigger a burden consumers and the economy will bear, a comparison is made of how much a typical solar plant is paid annually at 12 US cents per kWh and at 8 US cents. This latter figure has been proposed by an investor even without competition in this market.
This upshot is that consumers will pay an additional four US cents for the next 20 years after the regulator reversed its own decisions.
An industry insider showed that if for instance a plant generates 91.1 GWh at 26 per cent, and the load factor per annum is paid at 12 US cents rather than 8 US cents per unit, the difference in one year works out to a whopping $3.64 million (about Sh373.66 million).
Considering the PPAs are for 20 years, then the sums involved are substantial.
Moreover, because plants under the Feed-In-Tariff policy are given priority of dispatch, consumers are compelled to go for the expensive solar PV plants rather than the cheaper hydroelectric plants. This, painfully, will go on for the next 20 years.
To avoid a supply-demand mismatch, the commission had proposed phasing construction of the plants in ramps of 10MW over a four-year period.
This was to avoid a situation where the country would be stuck with excess supply that would have to be paid for, in case demand would not rise as expected.
Tragically, however, the shift to an auction system for renewable energy projects was not acted upon immediately, effectively protecting the interests of the investors.
“Any investor who is adequately compensated above the market rate would have no problem sharing the resultant largesse with whoever assisted them in the approval process,” the insider noted.
This story is part of an investigative series into the rot at Kenya Power. Also read:
