Kenya Power has reduced its system losses marginally to 18.9 per cent of the electricity purchased as the firm moves to modernise its infrastructure.
The electricity distributor’s latest annual report shows that power leakages as at June contracted from the previous year’s 19.4 per cent, an improvement which portends positive prospects for the firm’s profit margins.
Kenya Power’s electricity leakages — the share of energy purchased but lost — remain above targets levels at 17.5 per cent as at June 2015 and 18.1 per cent a year earlier.
Electricity losses have a direct impact on consumers’ bills as it is factored in tariff planning while the listed power company loses billions in earnings and value for its shareholders.
“The company is working towards reducing system losses from double to single digit over time to improve the energy balance, reduce energy purchase costs and consequently increase revenues,” Kenya Power said in its recently released report.
“We are also deploying an information technology system to help manage system losses. In this regard, we have acquired an Energy Balance Module software to help identify areas with high losses within our power network.”
The Energy Regulatory Commission, the sector’s regulator, factors electricity losses, including leakages and theft, into power tariffs. Power losses below 15.9 per cent translate to efficiency earnings while the firm absorbs losses when the rate stays above.
Records indicate that one percentage point in system losses is equivalent to sales of Sh1 billion. A cut in system losses reflects efficient use of the country’s power resources.
Last month, Kenya Power tapped the International Finance Corporation, the World Bank’s private arm, for a two-year project aimed at sealing these electricity leakages.
The Sh80 million initiative, half financed by the IFC, will focus on reducing power losses on the utility firm’s network.
“To help us achieve our single digit target, we have contracted the IFC’s energy and water advisory to implement loss reduction initiatives,” Kenya Power managing director Ken Tarus said in September.
“These initiatives include support for both technical and commercial loss reduction, training, and management support.”