How much does Kenya Power lose per hour of a nationwide blackout?

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

19 March 2023

Peter Githae’s question is short and to the point: “How much, in does KPLC lose for every one hour of a national power outage?”. The quick way to work it out is to find out the annual sales revenue of the company, divide that by 365 and then by 24.

In the year ended June 30, 2022, Kenya Power recorded sales of Sh157 billion. On average, this works down to about Sh430 million per day, which comes to about Sh18 million per hour. But is this money actually lost? Does it leave the company’s bank accounts? The answer is no!

The money that actually leaves the account is the cost of running the business - the operating costs – workers salaries, rents for premises and so on – as well as the finance costs. In the case of Kenya Power, these amounted to Sh38 billion and Sh12B respectively. The total is about Sh50B. This works down to about Sh5.7 million per hour (Sh50B divided by 365; divided by 24).

That’s not all; we must also consider capacity charges that are paid to power producers. This is money charged for making the generators available to Kenya Power. It is to the practice of some car hire companies that charge a daily rate as well as a mileage rate. Even if you don’t use the car, you must pay a hiring amount, and when you use it, you pay a usage fee depending on the distance you drive it.

Capacity charges are usually higher than the electric energy cost. In the case of the public utility, KenGen, the total capacity charge for all its generators is about three time the amount it bills Kenya Power for electricity supplied. In the year ended June 30, 2022, for example, KenGen billed Kenya Power a total of Sh41B out of which Sh25B was capacity charges for all its generators.

The independent power producers (IPPs) charge higher than KenGen: I estimate their capacity charges to be about 85 per cent of their total bill. In the last financial year, they billed Kenya Power a total of Sh56B, hence, out of this, approximately Sh50B was capacity charge.

Thus, in total, Kenya Power paid Sh75B as capacity charges during that financial year. This works to about Sh8.5M per hour. When add this to the Sh5.7M for other operating expenses, the total loss during a nationwide blackout comes to about Sh14M per hour.