On Tuesday, March 28, 2023, the Energy and Petroleum Regulatory Authority (EPRA) rejected Kenya Power’s proposal to have consumers, whose revenues are in foreign denominations, settle their payments using foreign currencies.
Daniel Kiptoo, EPRA Director General, gave this statement in response to the released Kenya Power’s half-year reports released on Monday, February 27, 2023, and the subsequent statement by Kenya Power where they outlined plans to reduce foreign exchange losses by accepting payments in USD and Euro for consumers whose revenues are in dollars and euros, as a plan to improve their financial performance for the 1st half of 2023.
This strategy followed owing to the fact that KPLC had made a significant loss of Kshs 1.1bn for the half-year period ended 31st Dec 2022 attributable to foreign exchange losses and the 15.0% electricity tax tariff on consumers.
Read: Tough Times For Kenya Power As It Records A KSh1.1Bn Half-Year Loss
“This drop is attributable to increased foreign exchange losses, and the implementation of the 15 percent reduction of the end-user electricity tariff as recommended by the government in January 2022,” Kenya Power said.
EPRA Director argued that this move would see the utilities compensated twice for exchange rate losses. He added that the compensation on consumer bills done through the foreign exchange surcharge reimburses the utility for fluctuations of hard currencies for spending denominated in USD and EURO.
“You can’t have your cake and eat it, that is collect in dollars and have the forex adjustments as well. It has to be one.” Said Kiptoo.
While he agrees with Kenya Power’s move to solve a greater macro problem, the Director said the proposal may not be necessary if the ongoing interventions by the government work.
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