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Kenya Lost U$44m After President Uhuru Ordered Power Tariff Cut

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Kenya Power and Lighting Company, KPLC which transmits, distributes and retails electricity to customers throughout the country has recorded a massive revenue loss attributing it to the Electricity price cuts ordered by President Uhuru Kenyatta two years ago.

The company said it had lost a massive U$44,124,676 worth of revenue according to the financial year ended June 2019.

Mahboub Mohamed the KPLC company chairman says that the force power tariff cut, “dimmed the company’s revenue prospects by Sh4.8 billion of the total projected revenues in the tariff application, thereby necessitating stop-gap measures in short-term borrowings to enable the company meet its financial obligations.”

President ordered the downward revision of electricity pricing in Kenya following countrywide outcry and appeal against exorbitant pricing per kilowatt.

The costly tariff was introduced earlier in July and almost doubled the monthly bills for higher-income households, triggering complaints that forced Epra to cut the tariff from November 2018 to July 2019 to Sh10 per kilowatt hour from Sh15.80 for customers who use below 100 kilowatts per month.

“We operate in a regulated electricity pricing environment which has a major impact on our revenue margins,” said Mohamed.

According this company, its net profit fell by 92% from Sh3.26 billion to Sh262 million in the year to June 2019— the lowest since it returned to profitability in 2004 after the 2003 loss of Sh2.89 billion.

Kenya Power had before the tariff cut negotiated a rise spanning two years only to see it last three months. The utility firm is currently pushing for an upward review of the tariffs to reverse its falling earnings, which have seen it issue a profit warning this year — the third one in a row.

The profit alert means the company’s net earnings will decline by at least 25 percent of last year’s Sh262 million — which was the worst in 16 years.

The firm spends billions of shillings annually on power lines, transformers and labour operations, with customer numbers having grown to 7.067 million. Its transmission and distribution costs increased 14.1 percent to Sh39.6 billion in the year ended June compared to Sh34.7 billion the year before.

Considering the Kenyan law, it is provided that electricity tariffs be reviewed every three years, but the timetable has been erratic as the regulator has often delayed or amended the rates.

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  1. Pingback: Kenya Lost U$44m After President Uhuru Ordered Power Tariff Cut – MONEYINAFRICA

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