Households pay Kenya Power an additional 15 billion shillings for the fuel surcharge

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Households pay Kenya Power an additional 15 billion shillings for the fuel surcharge


Kenya Power workers carry out repair work along Haile Selassie Road, Mombasa, December 5, 2020. PHOTO | KÉVIN ODIT | NMG

Households paid an additional 15.3 billion shillings to Kenya Power following increased use of electricity generated by expensive fuel generators, reflecting inflationary pressure in Kenya’s economy.

The publicly traded utility said fuel adjustment surcharges imposed on consumers in the year to June rose from 11.18 billion shillings to 26.49 billion shillings.

The jump is linked to the increase in diesel power generation due to a decline in hydroelectric power, highlighting power purchase agreements signed with private investors.

Energy consumers in Kenya often complain about high electricity charges, with some of the costs attributed to idle capacity charges to compensate electricity generators for electricity produced but ultimately not used.

The utility’s net profits doubled to 3.5 billion shillings and it declared no dividends – the fifth year it has frozen payouts to shareholders.

“This increase in the shipment of thermal power plants was due to inadequate power generation from hydro sources due to insufficient rains, unavailability of major geothermal power plants, interruption of the Loyangalani transmission power line -Suswa and an increase in fuel prices globally during the year,” Kenya Power said in reference to the fuel surcharge increase.

The drought, which has left millions in need of food aid, has lowered water levels at hydroelectric dams, increasing reliance on expensive generators.

Electricity consumption by thermal power stations fell from 876 gigawatt hours (GWh) to 1,539 GWh during the year under review.

This increased the fuel surcharge to Sh7.09 per kilowatt hour in October bills, an increase from Sh4.63 in January, while the exchange fee rose from Sh0.73 per unit to 1 .48 Sh.

The rising cost of electricity has triggered price pressure across the economy, with producers of services and goods heeding higher prices.

The government has lobbied unsuccessfully for the revision of power purchase agreements to ease the burden on consumers. Under a typical power purchase agreement, a power producer is paid for any electricity produced, even if it is impossible for Kenya Power to sell it to consumers due to excess capacity and lack of capacity. other reasons. The price of crude oil on the world market has increased significantly. this year on the problems of supply shortages due to the Russian-Ukrainian conflict. Russia is the world’s third largest oil producer.

The shilling has depreciated 6.7% against the dollar this year, trading at 121.30 units.

Kenya Power revenue increased by 9.1% or 13.2 billion shillings to reach 157.4 billion shillings, while cost of sales increased by 22% or 21 billion shillings to reach 115.2 billion of shillings.

“Financial costs rose from 9.05 billion shillings to 12.69 billion shillings, due to the depreciation of the Kenyan shilling against major world currencies,” Kenya Power said.

Lower gross margins, however, did not translate into bottom lines after the company incurred lower tax charges, which helped it push its net profit down from 1.49 billion shillings to 3.5 billion shillings.

Kenya Power’s tax bill for the year to June was 1.62 billion shillings, compared to 6.7 billion shillings for the year to June 2021. The company did not indicate the due to lower tax bill.

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