The full extent of the impact of coronavirus disease pandemic is only unfolding, with the weakest businesses and institutions set to be hardest hit. Locally, it was inevitable that electricity distribution, monopolised by Kenya Power, was a sitting duck. After vast restructuring during the Kibaki Administration, the power distributor made good progress and indeed became a magnet for investors.
That was not to last because some of the structural weaknesses persisted. They included massive system losses that included theft of electricity by both big and small crooks, ambitious but economically suspect mass power supply and tender corruption.
It suffices to say that a myriad of corruption and conflict of interest cases have been filed against Kenya Power, Kenya Pipeline Company and Geothermal Development Corporation officials.
It was only a matter of when not if the chickens would come home to roost. Yesterday, we reported that the Ministry of Energy is set to declare force majeure on power supply contracts.
Citing the pandemic, it wants to recuse Kenya Power from honouring some supply contracts.
According to the ministry, and also verifiable facts, the distributor is stuck with power it can’t sell because of effects of the pandemic.
Large power users have been hit by the economic lockdown to the detriment of the power market.
We support the ministry but only to an extent. True, the public should not be subjected to paying for power it hasn’t used, the fixed charges notwithstanding. In the long-term, it calls for better contracting terms that will attract investors as well as help the public.
That is why we urge caution in whatever action the ministry takes.
However, the government must use this opportunity to restructure Kenya Power and the energy sector as whole. While no one can argue that an emergency hasn’t occurred, it is the iniquities in the firms that has most exposed the sector most.
The emergency should not be restricted to action on suppliers. The distributor and other players in the sector must be streamlined for long-term survival of the industry.
This should come simultaneously with the reopening of the economy to avert a catastrophe.
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