Ratio Magazine :: The Inside Track to East Africa’s Economies - Ratio Blog: Congratulations to the Good People at KPLC

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Ratio Blog: Congratulations to the Good People at KPLC

Monday, 02 November 2009

In her column for the (Nairobi) Star, Andrea Bohnstedt finds her appreciation for the good results posted by KPLC and KenGen only slightly tainted by memories of sitting in the dark during recent power cuts.

Congratulations to the good people at KPLC: A 75% increase in full-year pre-tax profits is quite an amazing result. Well done, KPLC, well done indeed! Some praise should also go to KenGen who seem to be slacking a bit with just a 48% increase in pre-tax profits, but all things considered, this is still a very sound figure. You must be very proud of yourselves, and I am sure that you have worked very hard to obtain such fantastic results, especially in this difficult economic environment.

Because it was a bit of a difficult economic environment, wasn’t it?

Forgive me if I have a moment of cognitive dissonance looking at these results – my brain seems stuck trying to process these figures against the recollection of the ‘power management strategy’, i.e. the three days of power rationing every week. And that was just the scheduled part of the power cuts. In fact, I feel like I have spent altogether too much time thinking about electricity recently, mainly because it wasn’t there quite a bit, leading to me rummaging around in the dark for candles, and frantic phone calls to friends to find out if I can squat in their (hopefully powered) living room or office for a bit to finish work on my deadline.

Lots of other small businesses do not have the advantage of portable work, so they just suffered the fall in turnover – or even had to close shop. Corporate big shots like Michael Joseph may be able to wave an imperial hand and command an army of generators lined up to keep Safaricom humming away nicely, but even the CEOs in charge of such large corporates have long made the point that sky-high power prices and power shortages are a key obstacle in running and growing your business around here.

So what gives? KPLC’s unit sales have only increased marginally, but they say their results were driven by improvements in operational efficiency, reduced system losses – and increases in tariffs since 2008. KenGen state that "hydrology this year was the worst we have had in the last 75 years … units sent out declined from 4,818m kWh last year to 4,339m kWh this year".

We all know that the rains had been insufficient earlier this year and last year. We all know because it ripples through the entire economy. We also all know because we’ve seen the hair-raising ‘fuel surcharge’ that KPLC slaps on our power bills – although admittedly it can be a bit difficult to detect because there are a number of other charges that make you wonder how the initial figure for your power consumption transmogrifies into that obese final sum at the end of your power bill.

What really irks me in all of this is that a drought is hardly a once-in-a-lifetime occurrence. That Kenya is structurally dependent on hydroelectricity is no carefully guarded secret, as is the fact that power demand had, for quite some time, been practically at the same level as output in a normal year. It is hardly rocket science to figure out that electricity generation has to be increased, and has to be diversified – and in case you find this intellectually challenging, KAM and others have kindly made the point repeatedly. But government regularly stares at a drought in wide-eyed wonder: ‘Oh look! No rains! No power! No food! Now what do we do?’ And the rest of Kenya has little choice but to pay up for expensive emergency power – on which the country has relied on for a few years. With that kind of executive planning, Vision 2030 simply won’t be happening. And that’s without looking at consumer protection issues: Why the end users have to pay for other’s planning failures, and KenGen and KPLC get to keep the cash.

Republished with permission from the Star.

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