Kenya Power & KenGen accounts don’t add up

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

08 April 2018

In 1895, Wilhelm Rontgen was experimenting with discharge tubes (the forefathers of our present day fluorescent tubes). He was investigating the how their colours change when different voltages are applied at their ends. In the process he stumbled upon something that was a lot more important than colourful glowing tubes: his discovered X-Rays.

In a similar way, last week I was searching for a plausible explanation to the fixed charge in our power bills. In the process I stumbled upon an anomaly in the audited financial statements of Kenya Power & Lighting Company and Kenya Electricity Generating Company.

Kenya Power reported it paid Sh34bn to KenGen in the 2016/17 financial year yet KenGen acknowledged that it received only Sh29bn. This left an unexplained difference of Sh5bn.

A reader suggested that the numbers in the Kenya Power reports could be the combined total paid to all power producers; including the independent private firms. Well, this is not so: the payments to the power companies are broken down in an itemised list. The Sh34bn was paid to KenGen alone.

Some else suggested that perhaps the Kenya Power figures include amounts paid for “Fuel costs”. Again, this is not so: the fuel amounts are listed separately. In 2016/17, KenGen was paid Sh9.07bn under this item in addition to the Sh34bn for “basic power purchase”.

In any case, if we subtract the Sh9bn from Sh34bn, we are left with Sh25bn. This is significantly lower than the Sh29bn that KenGen admits it received.

A third reader suggested that I should look at the numbers going back five years. I did one better: I tracked the audited accounts for the last 10 years. The trend is the same: in each year, the amount Kenya Power says it paid out is more than what KenGen says it received.

In total, the cumulative difference between the two figures over the ten-year period comes to over Sh26bn! This represents a shortfall of about 12 per cent.

I really look forward to an explanation of this persistent difference in the payments and receipts. It is quite troubling.

Going back to the original question about the fixed charge, I did a quick test of my own hypothesis. Kenya Power started the financial year with 3.7 million domestic customers and closed with 4.6 million. Thus, the median number was about 4.1 million. Each one of them was charged Sh150 per month making a total of Sh622 million or about Sh7.4bn in the year.

In the same period, KenGen declared that it received Sh21.7bn as “Capacity Charges” – its “fixed charge” to Kenya Power. This amount is much larger than the Sh7.4bn collected by Kenya Power.

Therefore, we are still quite far off from understanding the rationale behind the fixed charge. Still, I find it curious is that the telecoms companies do not have these fixed charges while the water utilities do.