Worry for electricity producers as number of large users decline :: Kenya

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The Kenya Electricity Transmission Company Chairperson James Rege (L) visits power plant station behind Sony Sugar company in Migori County (Photo Kingwara, Standard)

The number of large businesses connected to the electric grid declined by 12.7 per cent from 4,196 in 2008 to 3,662 in 2017, signalling worries to the power producers who lately have increased their output.

This is even as the number of domestic customers supplied with electricity by Kenya Power increased five-fold from 779,856 to 4,685,877 during this period.

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Most of the power generated in the country is consumed by large commercial industries. 

Kenya Power has been struggling to grow its large and industrial electricity consumer numbers, even as its customers on the domestic grid grew six-fold over the last ten years.

The firm experienced a major reduction in the number of its large customers in 2008 and has over the years been unable to grow to match the 2008 levels.

According to data by the Kenya National Bureau of Statistics (KNBS), Kenya had 4,196 large and industrial customers in 2008 but the number fell 39 per cent 2,533 in 2009.

The number has since then been on a growth path but is yet to reach the 2008 levels. KNBS in its Statistical Abstract 2018 noted that Kenya Power had 3.662 large customers by end of last year.

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However, an official from the power utility firm told The Standard that the decline was due to the reclassification of some of the large industries into small commercial firms.

The number of high paying large consumers is in comparison to the growth experienced among domestic consumers to reach 4.68 million, an over 500 per cent increase from 779,000 in 2008.

The growth in domestic consumers has been driven by Government’s push for the universal connection that has largely focused on this category of power users. The large consumer category of consumers is however critical for the company as it accounts for more than half of the company’s revenues, according to its financial reports.

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The large customers last year used 4.2 million kilowatt hours (KWh), which is 50 per cent of the 8.4 million KWh that Kenya Power sold to all its customers.

This is in comparison to the domestic consumers, whose consumption at 2.3 million KWh accounted for 27 per cent of the total electricity that Kenya Power sold despite their huge numbers.

According to Kenya ‘s annual report for the year to June 2017, large power consumers paid Sh55.7 billion, which accounted for 45 per cent of the power utility’s revenues during the year, which stood at Sh120 billion. Kenya Power has in the recent past faced difficulties that have threatened its bottom line.

The firm, whose managers were arrested and charged with corruption last month issued a profit warning, indicating its profit would fall by more than 25 per cent.

It later said it had asked for permission from the Capital Markets Authority to delay in publishing its results. It is expected to release its results for the year to June 2018 this morning.

The firm has been defaulting on paying debts to power producers including KenGen and OrPower. It recently paid Sh18 billion to KenGen, which could have eaten into its profits during the year.

It also faces an uncertainty with a law proposing to allow the licensing of other power distributors.

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While it might take years for a formidable competitor to establish the level of infrastructure that Kenya Power has, electricity generators such as KenGen are eyeing the market.

KenGen is in the process of setting up an industrial park where it will supply power directly to large consumers.

KenGen has also voiced its concerns on the limitations of the law that requires power producers to sell power to one firm, noting it poses a threat to its future survival, especially against Kenya Power defaulting on paying for electricity supplied.

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By Kenyan Digest

The Kenyan Digest Team