In his budget statement on Thursday, Treasury Cabinet Secretary Njuguna Ndung’u stated that the government will infuse Ksh19.4 billion to pay the debt owed to Kenya Power under the plan, as well as commercialize all future dealings with the Rural Electrification and Renewable Energy Corporation.
Kenya Power is facing billions of shillings in unpaid bills for operating and maintaining the entire network on behalf of the Rerec for a program to extend the grid to rural areas.
Aside from repaying Kenya Power and commercializing future projects with State agencies, the restructure aims to improve the company’s overall performance.
“The government will settle Rural Electrification Scheme operations and maintenance costs, which had a deficit of Ksh19.4 billion as of June 2022, and ensure KPLC, Rural Electrification, and Renewable Energy Corporation enter into a commercial for future rural electrification schemes maintenance costs,” said the CS.
In 2021, a work panel advised paying down the rural electrification debt to improve the state’s financial stability.
The task group offered suggestions, some of which were implemented, such as allowing sector businesses a moratorium on debt repayment and paying KPLC a portion of the rural electrification program shortfall.
The utility’s board of directors is also set to be restructured, as the state seeks greater private-sector representation.
Kenya Power’s board currently has a majority of government directors, with private investors squeezed out.
“The government will establish a new governance structure for Kenya Power that will give the private sector fair representation, reflecting the company’s shareholding structure,” Prof Ndung’u said Thursday.
The utility’s commercial debt was Ksh39.7 billion as of June last year, while Treasury on-lent debt was Ksh25.1 billion during the same period, as the company maintained a negative working capital position for the sixth consecutive year.
During the time, current liabilities exceeded current assets by Ksh55.7 billion, demonstrating the vital government assistance for the enterprise.
