Kenya Power to double prepaid meter numbers

Last Updated 13 years ago by Kenya Engineer

Kenya Power will nearly double the number of households on prepaid meters as the utility firm races to reduce electricity defaults and cut operation costs.

The electricity distributor said Friday it will introduce 350,000 prepaid meters over the next year, up from the current 400,000 installed over the past four years.

Kenya Power reckons the new billing system will boost its cash flow and lower costs on reduced need for meter readers, less work at the banking halls and lower postage costs — which stand at Sh800 million annually.

The deepening of the pre-paid model will eliminate the risk on defaults on payment, which saw the firm’s doubtful debts stand at Sh3.7 billion in the year to June.

Consumers on prepaid meters use power they have paid for in advance, similar to mobile airtime top-ups, helping Kenya Power receive its revenues in full.  The model is also expected to reduce the pressure on the company’s wage bill on reduced need for meter readers.

The company’s workforce rose to 10,465 employees in the year ended June compared to 7,015 in 2009, a move that raised its wage bill to Sh11 billion from Sh7 billion in the period.

“We shall reduce non-payment of electricity and there will be no need for motorbikes by meter readers,” acting Kenya Power CEO Ben Chumo said during the firm’s annual general meeting on Friday.

The plan will, however, create thousands of jobs as the power company taps agents to sell power tokens. The 400,000 pre-paid meters account for about 17.3 per cent of Kenya Power’s 2.3 million customers.

Kenya Power profits fell by a quarter to Sh6.4 billion in the period to June and it failed to reward shareholders for the first time since 2004 on high loan costs.

The utility’s finance costs for the year more than doubled to Sh2.5 billion on the short loans it borrowed to revamp its ageing grids and support increased customer connections.

This resulted in a negative cash position of Sh2.1 billion compared to a positive Sh800 million last year, denying the firm the muscle to pay dividends — which was a blow to shareholders who have seen the stock shed 10 per of  its value the past three months.

Source: Business Daily