Ruto’s four-point plan to restructure Kenya Power
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National Treasury reveals Ruto's plan for restructuring Kenya Power to improve its all-around performance
National Treasury reveals Ruto’s plan for restructuring Kenya Power to improve its all-around performance.
In a new effort to turn around Kenya Power’s woes, the Treasury has unveiled a four-point plan to restructure Kenya Power that will see the utility get more than Sh19.4 billion from the taxpayer and a shake-up of its governance structure.
In his budget speech on Thursday, Treasury Cabinet Secretary Njuguna Ndung’u stated that in addition to commercializing all future interactions with the Rural Electrification and Renewable Energy Corporation (Rerec), the government will invest Sh19.4 billion to pay the debt it owes Kenya Power under the plan.
As part of a plan to extend the grid to rural regions, Kenya Power is struggling with outstanding bills totaling billions of shillings for running and maintaining the whole network on behalf of the Rerec.
Besides settling the cash owed to Kenya Power and commercializing future projects with the State agencies, the restructuring targets improving its all-around performance.
“The government will settle RES (Rural Electrification Scheme) operations and maintenance costs which had a deficit of Sh19.4 billion as at June 2022 and ensure KPLC, Rural Electrification, and Renewable Energy Corporation enter into a commercial for the future rural electrification schemes maintenance costs,” the CS said.
A task force had in 2021 recommended payment of the rural electrification debt to boost its financial health.
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The task force made recommendations, some of which have been implemented, including granting of on-lent loan repayment moratorium to sector entities and the partial payment of the rural electrification schemes deficit to KPLC.
The utility’s board of directors is also headed for a major shake-up as the State eyes more representatives from the private sector.
Kenya Power’s board currently draws the majority of its 12 directors from the government with private investors squeezed out.
“The government will establish a new governance structure for Kenya Power that will give the private sector fair representation, reflecting the company’s shareholding structure,” Prof Ndung’u added on Thursday.
The utility’s commercial debt stood at Sh39.7 billion as at June last year while on-lent debt by Treasury was Sh25.1 billion in the same period as the firm remained in a negative working capital position for the sixth consecutive year.
Current liabilities outstripped current assets by Sh55.7 billion in the period, highlighting the critical government support for the firm.
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