This archive report was first published on 17 November 2021.
Kenya Power, the country's struggling utility firm, is facing a severe financial crisis due to unpaid services worth over Sh40 billion.
According to a report by Auditor-General Nancy Gathungu for the year to June 30, 2021, the company's gross current trade and other receivables amounted to Sh62.6 billion, with electricity receivables of Sh29.67 billion being the largest portion.
Of the Sh29.67 billion in electricity receivables, only Sh15.88 billion had been covered in the allowance for Expected Credit Losses (ECL), leaving out Sh13.78 billion. This is an increase from the Sh11.9 billion that was uncovered in the year to June 30, 2020.
The report also notes that 56.7 per cent of the receivables (Sh36.79 billion) had remained unpaid for more than three months after their due dates, raising worries that much of the debts could not be paid.
Kenya Power has set aside Sh23.8 billion to cover the expected losses, under international financial standards, including Sh15.88 billion for electricity receivables, up from Sh15.49 billion it had set aside for the same purpose last year.
The company continues to install prepaid and automatic meters as strategies to minimise the risk of non-collection, and has also taken steps to disconnect customers who fail to pay their bills.
Losses are likely to have huge ramifications for Kenya Power's finances, particularly after it made losses of Sh900 million last year. In the year to June 2021, the utility firm made a Sh1.4 billion profit.
