Kenya Power lost Sh2.1 billion in the 15 percent tariff discount implemented last year as other State-owned firms in the electricity sector refused to lower their charges as agreed with the government.
The revenue loss has been disclosed by the Auditor-General in its report on the electricity distributor’s financial statements for the year ended June 2022.
Kenya Electricity Generation Company (KenGen), Kenya Electricity Transmission Company Limited (KETRACO) and the Geothermal Development Company Limited (GDC) were the companies that were to reduce their billing to make the tariff cut a reality.
They however did not keep their end of the bargain, leaving Kenya Power to implement the tariff cut while absorbing the loss.
“KPLC implemented the tariff reduction from January 2022 but the other agencies did not implement the cost reduction measures as per respective commitments which were estimated to translate to Sh2.1 billion,” the government auditor said.
“Consequently the company did not realise full revenue support occasioned by the 15 percent tariff reduction directive.”
KenGen denied Kenya Power the largest discount of Sh1.75 billion in its billing, a separate audit of the power producer’s accounts shows.
The national government spent heavily to implement the tariff reduction, according to the Kenya Power report.
The State disbursed a total of Sh7 billion to the electricity distributor to support the initiative which was designed to offer financial relief to consumers.
The other government-owned players in the energy sector including KenGen offered partial discounts to Kenya Power compared to their commitments.
“The board of directors agreed to contribute an amount of Sh3.5 billion through fair reduction of invoices to Kenya Power who would, in turn, transfer the benefits to consumers,” the auditor said in its review of KenGen’s accounts for the year ended June 2022.