Kenya Power has admitted that the firm had at one point been reduced to a playground for people seeking gains from flawed procurement deals, driving it into dismal financial performance.
Board chairperson Vivienne Yeda told shareholders on Thursday that shaky leadership had reduced the utility firm into a “procurement machine” but the current team is working to reverse this.
“The absence of a robust institutional framework created a vacuum, which inevitably was filled by all types (of people) who for instance drove Kenya Power into becoming a veritable procurement machine,” said Ms Yeda.
The comments offer an indictment to former bosses with some having been arrested and prosecuted over financial improprieties at the State monopoly.
Addressing shareholders during a virtual annual general meeting in which the utility firm laid bare the financials showing a Sh939 million net loss for the year to June 2020–the first loss in 18 years–Ms Yeda said the board is now working to turn around its fortunes
“It is our task as the board to get your company back to the basics of a good business and ensure the company gets value for money,” said Ms Yeda.
Kenya Power’s performance has been dimming over time, hurt by sharp rise in costs and slow growth in electricity revenue.
The utility firm last paid a dividend in 2008 when it returned a net profit of Sh1.76 billion.
Ms Yeda now says the board is establishing the framework for staff to use its “incredible talents” to create a profitable world class supplier of electricity.
Kenya Power’s liquidity position has come under increased pressure given that obligations have remained constant mostly due to the nature of power purchasing contracts that force it to pay for idle electricity based on skewed agreements.
The State monopoly’s short-term liabilities had, at end of June, outstripped short-term assets by Sh74.5 billion, putting it in a difficult position in honouring obligations such as 40-day window for paying electricity suppliers. Ms Yeda told shareholders that the firm is keen on improving Kenya Power’s cash position in the short-term as a springboard for recovery and growth.
“We are well on course to realising this short-term goal through a combination of paying close attention to costs including sealing loopholes that facilitate financial haemorrhage, improving revenue collection and working to improve service delivery,” said Ms Yeda.
Kenya Power is also banking on renegotiation of power purchase agreements with electricity generators with a goal of bringing down energy prices and other terms downwards.
At the same time, President Uhuru Kenyatta has appointed a task force to review power purchase agreements (PPAs) signed between Kenya Power and all electricity generators with a goal of renegotiating the energy prices and other terms downwards.