Kenya Power and Lighting Company (KPLC) has failed to meet every system loss target set by its regulator over six consecutive years, with the gap between actual performance and the regulatory benchmark widening to its largest point on record and costing the utility billions in unrecovered revenue annually.
- •System losses, the proportion of electricity purchased from generators that never reaches billed consumers, stood at 22.07% in H2 FY2025/26 against an EPRA benchmark of 16.5%, a gap of 5.57 percentage points.
- •Technical losses from energy dissipation in aging infrastructure accounted for 12% of total losses in FY2022/23 and commercial losses from electricity theft, meter tampering and billing fraud accounted for 11.03% in the same year.
- •Commercial losses are not an engineering problem; instead, they are a governance and enforcement problem that accounts for nearly half of all losses.
Over 365 transformers were vandalized in 2024 alone, producing direct losses exceeding KSh 328 million.
EPRA has tightened the benchmark from 19.9% in FY2022/23 to 16.5% over three years. Actual losses have moved in the opposite direction relative to those targets, declining only 2.68 percentage points over five years against a required reduction of more than 8 percentage points.
KPLC's FY2025 annual report cites system losses of 21.21%, the company's best full-year figure on record, following a KSh 29.4 billion grid investment programme. Even so, losses remain 4.71 percentage points above the current EPRA benchmark and 6.81 percentage points above the 14.4% target the government set in a June 2023 Cabinet memo requiring that level by June 2025. That deadline passed without public acknowledgement of the miss and the target was revised to 2028.
The global average is 8 to 10%, meaning that Kenya is more than double that average.
The financial cost is direct and unrecoverable. EPRA's regulatory design bars KPLC from passing losses above the allowed benchmark to consumers, meaning the utility absorbs the full cost of every unit purchased and not billed above that threshold. At current consumption of approximately 11,700 GWh per year and average tariffs around KSh 20 per kWh, each percentage point of unrecovered losses represents roughly KSh 2.3 billion in annual unbilled revenue.
The 5.57 percentage point gap implies approximately KSh 12.8 billion in annual unrecovered revenue absorbed entirely by KPLC. KETRACO has estimated that reducing losses to 14.4% would save approximately KSh 10 billion, with each one percentage point reduction in commercial losses alone translating to KSh 1.2 billion in additional annual revenue.
Kenya's performance is the worst in the East African Community. Tanzania operates at 14.57%, essentially at EPRA's long-run target for Kenya. Rwanda stands at 16.90%, Burundi at 18.30% and Uganda at 20.60%. The global average is 8 to 10%, meaning that Kenya is more than double that average.
KPLC's financial recovery has been dramatic by other measures, swinging from a KSh 3.2 billion net loss in FY2023/24 to KSh 30.08 billion profit before falling to KSh 24.47 billion in FY2025 as forex tailwinds faded. That recovery was driven by shilling stabilization reducing dollar-denominated power purchase costs, not by loss reduction. When currency conditions normalize, the system loss problem is the primary drag that remains, suppressing revenue that would otherwise flow to shareholders including the government as 50.1% owner.
Parliament's Public Investments Committee heard in November 2025 that government institutions owe KPLC over KSh 26 billion in unpaid bills, that a 2019 Cabinet directive to refund KSh 19.4 billion remains unimplemented, and that over 21,000 connection projects worth KSh 12 billion are incomplete, some dating back 11 years. The system loss problem sits within a broader pattern of deferred obligations that has defined KPLC's relationship with its regulator and its government shareholder for most of the past decade.
