Kenya Power is facing a shortage of meter readers, so it has been estimating monthly power bills. PHOTO | FILE
Kenyan electricity transmission and distribution firm Kenya Power has recorded a negative working capital of Ksh7 billion ($70 million) in the six months to December 31, 2016, suggesting that the firm does not have cash to repay short-term debts and finance its day-to-day operations.
The Nairobi Securities Exchange-listed company, which has connected 3.4 million households to electricity in the past three years, is facing a shortage of meter readers, so it has been estimating monthly power bills for its clients, which has landed it in trouble with customers and impacted its cash flow.
The management attributed the negative working capital to underestimation of power bills and a change in the international financial reporting standards (IFRS) that saw Ksh5 billion ($50 million) converted from long-term debt to a short-term one.
“A significant number, mostly commercial customers, are still on post-paid. Most of the time we underestimate these bills and we end up having smaller figures for our debtors than those for the creditors. As a result we slightly end up with a smaller figure for the current assets compared with the current liabilities,” Harun Karisa, the firm’s manager in-charge of financial accounting told The EastAfrican.
Kenya currently has 5.7 million customers connected to the national grid to-date, from 2.26 million in March 2013.
Of the 5.7 million, 3.6 million are on the prepaid billing system and 2.1 million on post- paid metering.
According to Mr Karisa, Kenya Power does not have enough meter readers to cope with the increased number of accounts.
“We need to get accurate meter readings for our customers but there is still a lag in terms of the number of employees who can service 100 per cent of the accounts we have created,” said Mr Karisa.
Each of the post-paid customers has a maximum of 21 days to clear their bills depending on the date when the meter was read.
Kenya Power is 50.08 per cent owned by the state and its monthly revenue from electricity sales is estimated at Ksh 1 billion ($10 million) of which 99 per cent is collected, leaving one per cent in debts.
Large power consumers who are mostly on post-paid metering, account for about 55 per cent of the firm’s revenues from electricity sales while domestic consumers account for 45 per cent.
About 66 per cent of the revenues collected from domestic consumers go into the company’s operations while the balance goes to other levies such as fuel cost adjustment levy, forex adjustment levy, inflation, Water Resource Management Authority levy, Energy Regulatory Commission Levy, Rural Electrification Fund Levy and value added tax.
Similarly, only 55 per cent of the revenues from industrial consumers go to Kenya power while 45 per cent is spent on levies.
However, Kenya’s power consumers are weighed down by huge power bills following a steady increase in electricity connections that has left the utility firm short of meter readers, forcing it to rely on estimated bills. The few available meter readers are sent to premises after as long as three months to take actual readings.
The result is that consumers who pay their bills on a monthly basis are hit by high accumulated bills because the monthly estimates are usually quite conservative.
Kenya Power’s stock on the Nairobi bourse was last week trading at around Ksh6.9 ($0.06) per share.
Source: The East African