IMF pushes for restructuring of Kenya Power
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IMF (International Monetary Fund) pushes for restructuring of Kenya Power to offset its debt
IMF (International Monetary Fund) pushes for restructuring of Kenya Power to offset its debt.
The State must dissolve the Kenya Power board and pay the company at least Sh26 billion as part of reforms to stabilize the energy distributor, according to the International Monetary Fund (IMF).
The government promised to pay Kenya Power Sh19.4 billion last month as part of the Rural Electrification Scheme, but it has yet to provide the company Sh7 billion as restitution for the 15% energy pricing reduction it experienced last year.
The IMF advises that in order to improve the company’s performance, the Cabinet-approved steps to offset the debt and restructure the board should be implemented more quickly.
Kenya Power has significantly relied on the Exchequer for bailouts over the past five years, with the IMF estimating that the utility’s liquidity deficit was Sh64 billion.
“The 2023 comprehensive revision of base electricity tariff and a Cabinet approved action plan to strengthen KPLC’s financial health should be steadfastly implemented while monitoring any residual fiscal risks,” the IMF says in a report released on Wednesday.
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Electricity prices were increased from April this year by between 15 to 20 percent on average, in an effort to give Kenya Power billions of shillings in much-needed revenue to expand its network and foot electricity purchase costs.
A combination of last year’s tariff cuts, unpaid money for operational and maintenance costs under the rural electrification scheme and an increase in unpaid bills from customers have been choking the power utility.
“Together with this new tariff structure, timely pass-through of variable costs, and implementation of the Cabinet approved Action Plan, it is envisaged that KPLC’s liquidity position will improve and there will be no need for extraordinary support for the company.”
The Cabinet in June approved a shake-up of the Kenya Power board of directors to increase slots for the private sector with an eye on enhancing performance.
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