Kenya Power has tapped the International Finance Corporation (IFC), the World Bank’s private arm, in a two-year project aimed at sealing electricity leakages that eat into the power distributor’s profit margins.
The Sh80 million initiative, half financed by the IFC, will focus on reducing power losses on the utility firm’s network.
The electricity losses have remained above target levels, costing consumers, making the firm lose billions and denying shareholders of the listed company earnings.
They stood at 18.8 per cent in the financial year to June 2016, above the allowed level of 15.9 per cent, an improvement from 19.4 per cent a year earlier.
“To help us achieve our single digit target, we have contracted the IFC’s energy and water advisory to implement loss reduction initiatives. These initiatives include support for both technical and commercial loss reduction, training, and management support,” Kenya Power managing director Ken Tarus said in a statement.
The losses are the difference between the units of electricity Kenya Power buys from producers and the actual units sold to consumers.
The Energy Regulatory Commission, the sector’s regulator, factors electricity losses, including leakages and theft, in the power tariffs.
Power losses below is 15.9 per cent translate to efficiency earnings while the firm absorbs losses when the rate stays above.
Records indicate that one percentage point in system losses is equivalent to sales of Sh1 billion. A cut in system losses reflects efficient use of the country’s power resources.
Credit: Business Daily