Kenya Power has written off an additional Sh2 billion in unpaid electricity bills that it has lost hope of recovering, underlining the impact of customer defaults on the utility.
For context, this amount is higher than the total dividend of Sh1.3 billion at Sh0.70 per share that the utility is poised to give its shareholders after a six-year payout drought.
This has brought the total cumulative amount of power bills it has written off over the years to a record Sh19.28 billion as at June 2024, marking an increase of 11 percent from Sh17.28 billion in the previous year.
The Nairobi Securities Exchange (NSE)-listed company has been facing a growing headache of unpaid power bills amid an increase in electricity prices. For instance, in the year ended June 2024, power bills that had not been paid for more than 90 days jumped to Sh18.15 billion, from Sh15.8 billion.
What is more, according to the company, there is only a five percent chance of recovering these bills from defaulters.
In total, Kenya Power’s unpaid bills hit Sh36.06 billion during the period, marking a steady increase from Sh35.6 billion in the year to June 2023.
However, of this, Sh14.6 billion was outstanding for less than 30 days. This includes customers whose payment period was not due by the time the utility was ending its financial year on June 30.
The unpaid bills that are less than 30 days old are the least worrying for the utility, which says it has a 96 percent chance of recovering them from customers.
Power costs
Meanwhile, Sh3.22 billion was outstanding for between 31 and 90 days. For this category of customers, Kenya Power says there is a 59 percent chance of recovering the bills from the defaulters.
“The process of recovery continues unless it is confirmed that there is no prospect of recovery or the costs of such action will exceed the benefits to be derived. Amounts written off are determined after taking into account the value of the security bid,” said Kenya Power.
“The total cumulative provision for impairment of electricity receivables as at June 30, 2024 was Sh19,284 million (2023: Sh17,286 million).”
Although electricity prices fell by about 6.8 percent during the year ended June 2024, the cost of power remains prohibitive, especially for large customers such as manufacturers.
According to data from the Kenya National Bureau of Statistics (KNBS), 200 units of electricity were retailing at an average rate of Sh6,250.90 in June 2024, marking a significant drop from Sh6,707.02 in the previous year.
However, this is still higher than the cost of power just five years ago.
In June 2019, for instance, the average cost of 200 units was Sh4,732.12, according to KNBS. This means that in just five short years, the cost of electricity has increased by 32 percent.
Kenya Power, however, says that it is stepping up its multi-pronged efforts to reduce electricity defaults. The utility says it will step up disconnections of power supply to the premises of defaulters, increase it internal debt management capacity, use third-party debt collectors and focus on early identification and requirement for higher security deposits from defaulting customers.
“The company continues to install prepaid and automatic meters as strategies to minimise the risk of non-collection,” said Kenya Power.
