Treasury reveals four-point plan for restructuring Kenya Power

Kenya Power workers carry out repair works along Haile Selassie Road, Mombasa. FILE PHOTO | KEVIN ODIT | NMG

The Treasury has revealed a four-point plan to restructure Kenya Power that will see the utility get more than Sh19.4 billion from the taxpayer and a shake-up of its governance structure in a fresh push to turn around its fortunes.

Treasury Cabinet Secretary Njuguna Ndung’u in his budget speech on Thursday said the government will inject Sh19.4 billion to clear the debt it owes Kenya Power under the scheme besides commercialising all future dealings with the Rural Electrification and Renewable Energy Corporation (Rerec).

Read: Kenya Power gets Sh25bn loans repayment reprieve

Kenya Power is grappling with unpaid billions of shillings for operating and maintaining the whole network on behalf of the Rerec for a scheme meant to extend the grid to the rural areas.

Besides settling the cash owed to Kenya Power and commercialising future projects with the State agencies, the restructuring targets improving its all-around performance.

“The government will settle RES (Rural Electrification Scheme) operations and maintenance costs which had a deficit of Sh19.4 billion as at June 2022 and ensure KPLC, Rural Electrification and Renewable Energy Corporation enter into a commercial for the future rural electrification schemes maintenance costs,” the CS said.

A task force had in 2021 recommended payment of the rural electrification debt to boost its financial health.

The task force made recommendations, some of which have been implemented, including granting of on-lent loan repayment moratorium to sector entities and the partial payment of the rural electrification schemes deficit to KPLC.

The utility’s board of directors is also headed for a major shake-up as the State eyes more representatives from the private sector.

Kenya Power’s board currently draws the majority of its 12 directors from the government with private investors squeezed out.

“The government will establish a new governance structure for Kenya Power that will give the private sector fair representation, reflecting the company’s shareholding structure,” Prof Ndung’u added on Thursday.

The utility’s commercial debt stood at Sh39.7 billion as at June last year while on-lent debt by Treasury was Sh25.1 billion in the same period as the firm remained in a negative working capital position for the sixth consecutive year.

Read: World Bank lines up Sh40bn soft loan for Kenya Power

Current liabilities outstripped current assets by Sh55.7 billion in the period, highlighting the critical government support for the firm.

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