Kenya Power and Lighting Company (KPLC) plans to lay off an unspecified number of employees from its 10,481 workforce.
The power distributor claims that the move is informed by its current financial woes which have affected its ability to run sustainably and deliver services to the public.
The restructuring plan includes reduction of debts, electricity theft and strategy for renegotiating bulk power purchases from firms.
According to a report by Business Daily, Kenya Power’s salaries and wages rose by 9.1 percent to Ksh.17.4 billion in the year ended June 2020 when its workforce shrank to 10,481 from 10,914 the year before.
Due to the reduced number of staff, the salaries for those who remained on the payroll rose significantly.
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Administration expenses rose by Ksh.5.6 billion to Ksh.26.7 billion, plunging the company into a Ksh.939.4 million loss in the review period.
The company also suffers from poor sales collection, theft of electricity and defaults by big customers, including government ministries.
Kenya Power has invited local and international banks to offer it new cheaper loans that will be used to retire some of its Ksh.55 billion worth of commercial debt, potentially reducing its finance costs by hundreds of millions of shillings.
The company is seeking financiers offering both lower rates and longer loan life, adding that the value of the loans that will ultimately be refinanced will depend on the offers received.
Some of the loans have fixed interest rates, meaning the utility has not benefited from the recent drop in the base rate to below one percent.
Kenya Power’s current lenders include Standard Chartered Plc whose total outstanding loans as of June 2020 was Ksh.39.3 billion, Rand Merchant Bank (Ksh.2.4 billion) and Equity Bank (Ksh.4.9 billion).
The electricity distributor’s troubles have sucked in key constituents, including suppliers like KenGen, which has not been paid some Ksh.24 billion.
The company also wants to reduce collection losses by between two to three percent starting with the largest debtors and the public sector.
Kenya power is now seeking to take advantage of ultra-low interest rates in developed markets such as Europe and the United States to refinance its existing debt.