Page 27 - Vol 33 Issue 34 2021

Opinion energy

annually.
Along with financial costs, distribution losses
also contribute to greater greenhouse gas emis-
sions and increased water stress within the re-
gion.
On average, electricity utilities in the continent
lose 23 percent of all energy consumed due to
operational inefficiencies, at a cost of almost $3.3
billion per year, compared to a 10 percent global
average.
“Such inefficiencies undermine the future per-
formance of utilities, dissuade investment, and
harm the environment,” says the IFC.
Africa is struggling with huge operational in-
efficiencies estimated at more than $3 billion

an nually which have caused the region to suffer
the world’s highest energy prices, with most of its
electricity providers barely breaking even, limiting
their scope for reinvestment.
Kenya Power, which is 50.1 percent owned
by the state, is facing a demand crisis due to its
inflated electricity bills, corruption and increasing
shift to solar energy by households and industries.
The firm disclosed in its annual report (2019)
that demand risk is among major concerns to
its operations as heavy-consuming industrialists
seeking reliable and cheaper supply shift to solar
power.
In July last year, the government reconstituted
Kenya Power’s entire board as part of efforts to
streamline its operations, enhance efficiency in
power distribution and transmission and restore
the firm to a profitability path.
The firm’s system losses have increased to
23.46 percent from 18.68 percent in the past
seven years.
The firm attributes its high transmission and
distribution costs to higher allowance for ex pec-
ted credit losses and provisions for obsolete and
slow-moving inventories.
In Uganda, Umeme Ltd is the country’s main
electricity distribution company. The firm is res-
ponsible for distributing 97 percent of elec tri city
through a 20-year electricity distribution con-
cession from the government that took effect on
March 1, 2005.
State-owned Botswana Power Corporation
has been making operating losses for years due
to high import costs, nonperforming assets and
operational inefficiencies, causing it to rely on
government subsidies to stay afloat.
Morocco is partially unbundling electricity sec-
tor by steadily allowing an increasing amount of
private participation through a series of re forms
introduced since the mid-1990s.
James Anyanzwa is a Nairobi­based business writer
for The EastAfrican.

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