High electricity bills, delayed token purchases expose rot at Kenya Power

Kenya Power CEO Ken Tarus. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Complaints from customers over inflated power bills have concretised into a public-interest case currently pending in the Constitutional and Human Rights division of the High Court.

  • The matter will come up on May 7 when the parties will be making submissions.

  • Affidavits by officials at Kenya Power and the Energy Regulatory Commission paint a worrying picture of two institutions trying to pass the buck but in the end giving contradictory, if not revealing information on the rot in the energy sector.

Revelations of inflated power bills and unresponsive pre-paid token purchases could reveal the extent of rot in the country’s electricity distribution, even as Kenya Power tries to explain the twin issues away.

When and how some third party vendors were procured, and why at least two of them have been receiving preferential treatment from Kenya Power, including marketing Vendit and Dynamo Digital Company Ltd over its own prepaid paybill, remain serious but unanswered questions.

Complaints from customers over inflated power bills have concretised into a public-interest case currently pending in the Constitutional and Human Rights division of the High Court. The matter will come up on May 7 when the parties will be making submissions.

ERC

Ahead of the court date, affidavits by officials at Kenya Power and the Energy Regulatory Commission (ERC) paint a worrying picture of two institutions trying to pass the buck but in the end giving contradictory, if not revealing information on the rot in the energy sector.

The case was filed by lawyer Apollo Mboya who was later joined by Electricity Consumers Society of Kenya (ECSK).

In his affidavit, ERC director general Pavel Oimeke blames backdated bills allegedly caused by an error by the Government Printer.

He says that on December 13, 2017, ERC wrote to the Government Printer to find out how much it would cost to print four Gazette notices on fuel cost charge, foreign exchange fluctuation adjustment, Water Resource Management Authority levy and inflation adjustment, all to run from January to December 2018.

“ERC attached sample copies of the notice to guide the Government Printer in terms of size and outlay to enable the printer to determine the charges,” Mr Oimeke says.

BACKDATED

The said sample copies, the ERC boss says, were for notices that ran in February 2017 “which were at that time past and clearly were not intended for publication.”

The Government Printer, he says, “inadvertently ran all those sample notices as if they were for the month of December 2017.”

Interestingly, while addressing the cause of the inflated and backdated bills, Kenya Power company secretary Beatrice Meso says the problem arose due to challenges caused by migration from the old billing system, the Integrated Customer Service (ICS) to the new Integrated Customer Management System (InCMS).

“In the conversion from ICS to InCMS, the first respondent realised that some accounts were billed erroneously resulting in some customers receiving bills lower than or in excess of what they should have been charged,” Ms Meso states in her affidavit. The affidavit echoes what Kenya Power CEO Ken Tarus had told the Competition Authority on January 10, when he blamed the migration to the new billing platform for the “errors” consumers noticed.

BILLING

The contradictory explanations offered by ERC and Kenya Power on inflated bills to customers late last year and early this year add to the mystery surrounding the often obscured world of electricity billing.

Already, the Auditor-General Edward Ouko, who is included in the suit as a respondent, has said he is “ready and willing to carry out a forensic audit” of the Sh10.1 billion Kenya Power intends to recover from consumers retroactively.

Besides concerns over inflated bills, Kenya Power has lately been hit by a new problem: pre-paid consumers experiencing slow or non-responsive token generation. Curously, Kenya Power has been marketing third party vendors, in particular Vendit and Dynamo Digital Company Ltd, which charge power consumers premium rates, over the electricity retailer’s own 888880 M-Pesa paybill.

This has left many unanswered questions which  the Kenya Power management has struggled to clarify and led to a disruption of the service for close to 24 hours during the Easter weekend.

TOKENS

“The paybill number 888880 transacts 85 per cent of our daily prepaid token purchase of approximately 160,000. This huge traffic slows down the speed at which tokens are received by our customers. However, continuous improvements of our systems has resulted in ease of tokens being generated and sent to our customers. We expect this to improve further in the coming days as we continue to upgrade our systems and network,” Mr Tarus told the Sunday Nation.

Also being questioned are the owners of Vendit and Dynamo, and why they receive preferential treatment, including being marketed by Kenya Power on social media and text messages.

Documents from the Registrar of Companies show that Dynamo was registered in 2013 and its single biggest shareholder is Platinum Bridging Capital Ltd, which holds 285 shares or 75 per cent of the firm.

Vendit, on the other hand, is a trading name for the vending services offered by Professional Digital Systems Ltd (PDSL). PDSL was registered in 2010. 

PAYBILL

Reports suggest the two vending companies enjoy patronage from a top ministry of Energy official. One of the companies is said to be linked to a businesswoman who was named in the 2016 Sh5 billion ministry of Health scandal. 

The two vendors’ charges are premium and range between Sh11 and Sh165 above what Kenya Power charges. A power consumer who purchases tokens worth between Sh1,000 and Sh1,499 through Vendit or Dynamo pays Sh33 as paybill charges, which is Sh11 above what purchasing the same amount of tokens through Kenya Power’s 888880. Customers who spend between Sh5,000 and Sh7,000 in tokens have to pay Sh220 as paybill charges, which is Sh165 more than if the same customer accessed the service through Kenya Power’s paybill.

According to Mr Tarus, the charges are set by mobile network operators and Kenya Power has no role whatsoever.

“In the case you have mentioned, the money service provider has different tariff bands which include cost sharing with customer (Mgawo tariff band), business pays and customer pays,” he said.

VENDORS

“Because of our huge transactional numbers, we have the Mgawo tariff where we pay some fees and the customer pays some charges. The same does not apply to the super vendors hence customers pay all the charges,” the Kenya Power boss added.  

However, Kenya Power avoided directly responding to the question why it has in the recent days been promoting Vendit and Dynamo over 15 other third party vendors.

“We have a total of 17 super vendors for both prepaid and post-paid. Each super vendor is free to undertake marketing for their services,” Dr Tarus said.

Following a public outcry, Kenya Power on Monday sent unsolicited text messages to consumers informing them of “delays in prepaid token generations” before another one on Tuesday that the problem had been solved.

The electricity retail company now says the delay was as a result of “a technical hitch which was slowing down vending.”

COMMISSION

The Sunday Nation has in the meantime received information that the paybill number 888880 could have been sabotaged internally to give Vendit and Dynamo an edge. Dr Tarus did not respond to the allegations of sabotage.

The Kenya Power boss also declined to demonstrate how the two vendors were contracted or the length of the contract they have with the electricity distribution firm.

“They were competitively engaged as per the public regulations,” he said. “All the 17 super vendors have a current running contract as per our terms of engagement. Each super vendor is paid a commission based on volume of business transacted.”

Though we were unable to corroborate the claim, a credible Treasury source told us that the twin issues of inflated bills and tokens hitch may have something to do with certain decisions made before the 2017 elections. 

The Sunday Nation’s questions to Kenya Power CEO Ken Tarus

Q: How were the third party vendors (Dynamo, Vendit and Patapawa) contracted? Was there a competitive bidding and if so, can Kenya Power provide evidence to confirm that?

A: They were competitively engaged as per the public regulations. 

Q: Why does Kenya Power market only two of the three third party vendors, Dynamo and Vendit, over your own 888880 and Patapawa?

We have a total of 17 super vendors for both prepaid and post-paid. Each super vendor is free to undertake marketing for their services. 

Q: What has been the problem with Kenya Power’s 888880 paybill number? There are allegations that the paybill number was deliberately sabotaged internally so that Vendit and Dynamo can thrive and benefit some senior people within Kenya Power and the Ministry of Energy. What is your reaction to this?

A: The paybill number 888880 transacts 85% of our daily prepaid token purchase of approximately 160,000. This huge traffic slows down the speed at which tokens are received by our customers. However, continuous improvements of our systems has resulted in ease of tokens being generated and sent to our customers. We expect this to improve further in the coming days as we continue to upgrade our systems and network.

Q: What is the contract period with these two vendors (please state the start and end dates for each)? What is the financial value of the contracts Kenya Power has with Vendit and Dynamo? 

A: All the 17 super vendors have a current running contract as per our terms of engagement. Each super vendor is paid a commission based on volume of business transacted.

Q: What explains the differences in M-Pesa paybill charges by Vendit and Dynamo on the one hand and the cost a consumer incurs when using Kenya Power’s own 888880?

A: Mobile money services are offered by telcos and therefore subject to the existing charges levied by the mobile network operators. We have no control over these charges. In the case you have mentioned, the money service provider has different tariff bands which include cost-sharing with customer (Mgawo tariff band), business pays (and) customer pays. Because of our huge transactional numbers, we have the Mgawo tariff where we pay some fees and the customer pays some charges. The same does not apply to the super vendors hence customers pay all the charges.  

Q: Following public outcry, Kenya Power on Monday sent out text messages to consumers ‘alerting’ them to “delays in prepaid token generations” before another one on Tuesday that the problem had been sorted. What was causing the delay? 

A: It was a technical hitch which was slowing down vending but it was eventually resolved and full services restored back. We had not anticipated the magnitude and for that we apologised profusely to our esteemed customers.

Q: Would Kenya Power consider reviewing the contracts it has with the third party token vendors given that they are becoming too expensive to the consumers? If so, what would such a review entail? 

A: As indicated earlier, the charges are levied by mobile money service providers. We will endeavour to engage these providers with a view of lowering the cost of vending to ensure our customers enjoy affordable charges. 

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