Kenya Power is losing Sh17.5 billion annually through electricity thefts and leakages from an ageing transmission network, translating to lost earnings to shareholders of the listed utility.
Kenya Power managing director Ben Chumo on Thursday said the firm had channelled Sh10 billion in the current financial year towards strengthening transmission to cut the losses from 17.5 per cent to below 10 per cent.
“We are working to reduce the losses to single percentage digits,” said Dr Chumo, adding that one percentage point in system losses is equivalent to sales of Sh1 billion. This translates to lost revenues for Kenya Power shareholders given the firm had a target of keeping the transmission losses below 15 per cent.
The combination of power theft and leakages from the ageing transmission grid, which stems from the long period of under-investment, has continued to keep the system beyond the set targets.
“We are working to reduce the losses to single percentage digits,” Dr Chumo said during the signing of contracts with nine firms to install additional transformers and power lines closer to unconnected homes under the Last Mile Connectivity Project (LMCP).
Kenya Power recorded a six per cent growth in net profit to Sh7.43 billion for the year ended June 30. This means that system losses of Sh17.5 billion is more than twice Kenya Power’s annual profits and equivalent to 22.4 per cent of its Sh77.8 billion sales.
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The inefficiency in the power flow system happens in high voltage wires, substations as well as low voltage lines connecting households and businesses.
High voltage wires, above 132 kilovolts (kV), are managed by the Kenya Electricity Transmission Company (Ketraco) with Kenya Power handling lower voltage lines.
Meter tampering or outright theft of electricity have also dogged Kenya Power, which is also hurting from vandalism of lines and transformers.
The Nairobi Securities Exchange-listed firm is racing to expand its electricity distribution network to keep up with growing demand, including setting up new substations.
The utility has had to contend with increasing customer connections, particularly in rural areas, pushing homes and businesses connected to the grid to 4.1 million users, up from one million in 2010.
This has put pressure on the distribution grid. The number is set to grow even further with the rollout of the last mile connectivity project where homes will be connected to the national grid at Sh15,000 down from S5,000.
Kenya plans to add 5,000 MW of power supply capacity to the existing 1,664 MW by 2017 to accelerate economic growth.
Ketraco is spending billions of shillings in high voltage lines to move power from the generation plants to Kenya Power for onward distribution to users.
But a cut in system losses has the potential to create additional power, reducing the need to spend billions of dollars building new power plants.
SOURCE: BUSINESS DAILY