Kenya Power has secured debt relief from 14 lending institutions, looking to cut interest costs as it struggles with dwindling revenues. The power distributor now has access to a one-year moratorium on its foreign loans and is optimistic that the moratorium will be extended.
“The government has helped us in negotiating for a one-year moratorium on the on-lent debt that can be extended. We are also engaging a financier to take on board our commercial debt of about Sh60 billion so that we can convert it to a longer period and gain fresh momentum to recover”, says Kenya Power MD Bernard Ngugi.
Debt relief on foreign loans will be instrumental to the utility company, which has 18 foreign commercial and guaranteed loans. In a 2018 report, its government-backed external debt stood at KSh 44.7 billion, from lenders like the China Exim Bank, Japan Development Bank and World Bank’s International Development Agency (IDA.
Kenya Power is also eyeing a debt restructuring program with Stanchart, Equity among its other commercial lenders.
Apart from financing costs, Kenya Power is also facing high costs of purchasing electricity, which jumped by Ksh 18 billion last year to Ksh 70.9 billion.
The company is also holding discussions with the Energy and Petroleum Regulatory Authority (EPRA) to increase electricity prices by 20%. If the plan is successful, consumers using less than 100kWh a month will pay Ksh 12.5 per unit. Similarly, those who use more than 100kWh will pay Ksh 195.3 to cover the cost of buying wholesale electricity and maintaining the national grid.