Kenya Power losses on unpaid bills hit Sh17bn

Kenya Power has written off an additional Sh2.29 billion in unpaid electricity bills, bringing to a total a record Sh17.28 billion in outstanding bills that the utility has taken a hit on after losing hope of ever recovering them.

The utility—which sunk into a loss of Sh3.19 billion in the financial year 2022/23—has been facing an uphill task to recover unpaid bills from defaulting consumers, threatening to deepen its financial woes.

“Provisions for electricity debt and other receivables rose by Sh3.2 billion primarily due to an increase in unsettled customer debts during the year under review,” said Kenya Power in its latest annual report.

An increase in electricity prices following a review of tariffs by the energy regulator, coupled with a biting rise in the cost of living during the period, left households and businesses reeling, which saw a spike of 30.7 per cent in unpaid power bills to hit a record Sh35.69 billion.

“The total cumulative provision for impairment of electricity receivables at 30 June 2023 was Sh17,286 million (2022: Sh14,996 million),” it said.

Kenya Power usually charges a minimum deposit of Sh2,500 to be connected to the grid, partially covering defaults.

Despite this, power bill payment is increasingly becoming a headache, especially for large electricity consumers such as manufacturers amid the price increase.

Some of the main defaulters include counties and government ministries, departments, and agencies whose bills remain unpaid over several years.

According to the draft 2024 Budget Policy Statement released by the Treasury last week, counties owe Kenya Power Sh3.49 billion as of September 2023, with Nairobi County alone owing Sh2.17 billion.

“The amounts have been accumulating over the years. Consequently, the National Treasury has issued a circular to county governments reminding them to settle debts owed to KPLC and ensure that these pending bills are in their budgets and repayment plans,” it said.

The utility says it tries as much as possible to recover the electricity debts unless it confirms that there is no prospect of recovery or that the costs of chasing after the defaulters exceed the benefits derived.

“Amounts written off are determined after taking into account the value of the security held,” it said.

Kenya Power said it employs several strategies that have proved largely successful in recovering debt from non-paying customers.

It said this includes disconnections, increased internal debt management capacity, use of third-party debt collectors, focus on early identification and requirement for higher security deposits for defaulting customers.

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