• Wandayi wants the utility firm to share a plan for liquidity and balance sheet strengthening, which will lead the institution back to sustainable profitability.
• Meanwhile, the ministry is pursuing MPs to lift the moratorium on Power Purchase Agreements.
Image: ENERGY MIN/X
Kenya Power has been given a month to table to the parent ministry a report on reforms it is undertaking to improve operational efficiency and reduction in the cost of energy to users.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi also wants the utility firm to share a plan for liquidity and balance sheet strengthening, which will lead the institution back to sustainable profitability.
Kenya Power recorded Sh319 million in profit after tax for the half-year period to December 2023, amid an increase in electricity sales.
This was a comeback from a Sh1.1 billion loss recorded during the previous half-year period to December 2022, with the company’s past years being tough ones.
According to the company, the profitability was driven by growth in revenue resulting from increased electricity sales as well as the implementation of a cost-reflective tariff.
“I directed the board as a matter of urgency embark on an institutional reform pathway and report back to the Ministry covering key areas,” Wandayi noted during his inaugural visit to Kenya Power headquarters and a tour of some of its infrastructure.
The board and management have been tasked to appraise the ministry project challenges, resource requirements, timelines for completion, accountability, and expected outcomes.
The ministry is keen on the company’s technical and commercial loss reduction strategy with timelines to reduce current loss levels from 24 per cent to tariff tariff-setting allowable level of 19.5 per cent, in three years.
Wandayi also wants a report on technical, operational, human capital capacity of the National Control Center in power infrastructure configuration, power system protection and generation mix decisions in proactively managing system disturbances and avoiding the recurrence of major outages in the country, the latest being Friday.
The company must also improve its customer service improvement strategy, Wandayi noted, incorporating use of the Integrated Customer Management System at the National Customer Call Centre, to ensure customer complaints are conclusively resolved within the KPLC Service Charter timelines, while any power outages meet agreed performance targets.
He walso wants Kenya Power to strengthen its supply chain and logistics strategy that addresses perennial shortages of critical materials, such as transformers, meters, fuses, poles among other essential materials, which are not optimally stocked when needed to address customer complaints.
The report should also incorporate initiatives and interventions including collaborative operational and structural processes with Rural Electrification and Renewable Energy Corporation (REREC) and the Kenya Electricity Transmission Company Limited (KETRACO), to curb illegal connections and public safety concerns.
His directive comes on the back of recent frequent countrywide blackouts.
Meanwhile, the ministry is pursuing MPs to lift the moratorium on Power Purchase Agreements, Wandayi said, as part of initiatives to stabilise the electricity supply in the country.
MPs earlier this year halted the signing of new PPAs by Kenya Power to allow investigations into concerns that they were behind high power bills experienced by consumers, owing to expensive supplies to the utility firm.
The last IPP Kenya Power signed was in the year 2020.
Currently, Kenya Power has about 20 IPPs in its books cutting across the entire energy mix of wind, solar, hydro, geothermal and thermal, with most contracts expiring around 2034.
They are responsible for about 10 per cent of installed capacity.
In June this year, Kenya Power managing director Joseph Siror said the country needs more IPPs to meet electricity demand projected to increase in the medium to long-term,
This is on the back of growing peak demand that has gone up to 2,177MW and upward of 2,200MW in some instances.
The country has an installed capacity of 3,311MW of which 3, 155 is effective but generation from some sources such as wind and solar have traditionally fallen depending on weather conditions and night factor (for solar), affecting overall injection to the grid.