Kenya Power has been borrowing an average of Ksh7 billion in the last 15 years, a move that has ballooned its debt to Ksh109.9 billion as of June 2020 from Kshh4.1 billion in 2004.
Ksh56.6 billion is owed to commercial banks while Ksh53.2 billion is owed to other lenders, guaranteed by the Kenyan government.
For banks, Kenya Power owes Standard Chartered Ksh39.3 billion, Rand Merchant Bank Ksh9.2 billion, Equity Bank Ksh4.9 billion and Agence Francaise De Development Ksh1.2 billion.
A report by the former Audito-general Edward Ouko reveals that much of the debt was accumulated during the last eight years, following Jubilee government’s ambitious Last-Mile Connectivity project.
The project has seen electricity network rise from 41,486 kilometres in 2013 to 84,681 kilometres in 2020, while connections have increased to 7.5 million from 1.2 million.
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But this has not come without a cost. Despite recording an increase in revenues from Ksh20.3 billion in 2004 to Ksh133.3 billion in 2020, Kenya Powerhas not been able to match the operational costs and the balloning and maturing loans.
For instance, one of the loans owed to Standard Chartered will mature in June, same as another one owed to Rand Merchant bank.
With the power distributor posting a net loss of Ksh939 million in the financial year ended June 2020, it is unlikely that it will be able to service the loans. Instead, it may turn to other lenders, or extend the maturity period which would attract more interest.
Kenya Power has paid Ksh33.9 billion in interest on its loans alone between 2012 and 2019. Kenya Power paid an interest of Ksh1.1 billion in 2012, Ksh1.3 billion in 2013, Ksh2.2 billion in 2014 and Ksh4.6 billion in 2015. In 2016, it paid interests for its loans amounting to Ksh5.7 billion, Ksh5.5 billion in 2017, Ksh6.1 billion in 2018 and Ksh7.1 billion in 2019.
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In the six months to December 2020, Kenya Power’s finance costs more than doubled to Ksh8 billion from Ksh3.8 billion in a similar period in 2019.
Annual debt obligations for Kenya Power have hit Ksh20 billion.
Despite most of the connections yielding meagre income, there are fears that there was a lot of mismanagement in implementing them where costs were inflated.
To cover for its mounting financial woes, Kenya Power has floated an Expression of Interest (EOI) for refinancing of its Sh54.6 commercial debt.
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