Kenya Power has dropped plans to tap private companies to connect customers in informal settlements and collect bills, following advice from the State Council and parent ministry.
The company has now delegated the task to the state-owned Rural Electrification and Renewable Energy Corporation (Rerec), with Kenya Power tasked with ramping up efforts in its customer segment that largely drives its electricity sales.
In November last year, Kenya Power invited private companies to bid for deals that initially targeted Nairobi’s slums, in what would have been a first for the company to delegate such a role to the private sector.
Informal settlements have been a headache for Kenya Power for many years, with illegal connections and difficulties in billing customers. Illegal connections also led to electric shocks in the areas.
“We have been pushing for this but it goes against the government’s goal because connecting customers in the informal sector is more of a social goal than a commercial one,” said Joseph Seror, managing director of Kenya Power.
“The advisors at the State Palace told us that we have no business targeting clients in the informal settlement and asked us to leave it to Rerec. Mobilizing this initiative under the umbrella of Rerec could attract grants to narrow down the informal sector and bill them.
Slums across the country are notorious for illegal connections, which continue to drain Kenya Power Corporation’s revenues as well as endanger the lives of millions of people due to poor quality communications.
Rerec is the government agency mandated to connect Kenyans in rural areas with subsidized rates, thus promoting the social aspect of improving access to electricity across the country.
Most households in informal settlements use electricity only for lighting, making this sector economically unviable for Kenya Power.
Industries represent the highest electricity sales, followed by homes and small and medium enterprises.
Under the agreement, private companies will buy electricity in bulk from Kenya Power at discounted prices and then resell it to customers.
Private companies were required to install their own meters and sub-meters in companies and customers’ homes in slum areas.
Among the city’s slums targeted were Kibera, Mukuru, Kamukonji and Kibagari. It remains unclear whether the Rerick Center will continue to prioritize these urban slums.
“I’m not aware of how far they (Rerec) have gone now, I need to check on them,” Seror added.
Kenya Power had 9.7 million customers in the year to June after adding 447,251 new connections in the period.
Electricity sales grew by 2.76% to 19,516 gigawatt-hours during the period, with the company achieving a net profit of Sh30.08 billion.
However, Kenya Power believes that returns would be higher if it were not for the theft of electricity, especially in informal settlements.