February 28, 2020 / 1:42 PM / a month ago

UPDATE 2-Kenya Power goes after electricity thieves following profit slump

* Says losing revenue from illegal grid connections

* Kenya Power FY pretax profit fell 93%

* Aims to recover over 20 bln shillings in unpaid bills (Updates with CEO’s comments)

By George Obulutsa

NAIROBI, Feb 28 (Reuters) - Kenya Power is rooting out electricity thieves using illegal connections to the national grid to deprive the company of revenue as it seeks to lift itself out of a deep earnings slump, its chief executive said on Friday.

The company, which is the main electricity distributor in the East African nation, said its pretax profit for the six months to the end of December plunged 69%, a day after it posted delayed results for the full year ended June 2019, which showed a 93% slump in pretax profit.

The delay was caused by a vacancy at the auditor general’s office which audits state-controlled companies.

“We are moving in to ensure that all points of consumption are metered. This is because most of the points we are metering, were being robbed... and that is contributing to system losses,” CEO Bernard Ngugi told reporters.

The company has fired 110 workers in the past year due to fraud and illegal connections to the grid carried out by people suspected to be its employees, Ngugi said.

Since the start of its current financial year, 630 people have been arrested and prosecuted for various crimes relating to electricity theft and fraud, with 115 people convicted, the company said in a statement.

It says its system losses from transmission are at 20%, well above the global benchmark of about 15%. The extra losses translate to an annual loss of about 3.06 billion shillings ($30.28 million).

The company is also trying to recover unpaid bills amounting to 20 billion shillings from individuals and institutions in order to improve its future earnings, Ngugi said.

“We have given ourselves targets to collect that revenue to make ourselves more liquid,” he told reporters, without providing more details.

Kenya Power’s pretax profit for the first half to the end of December stood at 1.14 billion shillings, down from 3.69 billion shillings a year earlier.

Total revenue rose during the period while finance costs dropped by a fifth because of a firmer local currency, said the company.

The rise in first half revenue and the drop in finance costs were, however, not enough to offset a sharp increase in its costs of buying bulk electricity, which jumped by more than 5 billion shillings.

In July 2018, Kenya Power faced a crisis after its then chief executive, his predecessor and several senior executives were arrested and charged with conspiracy to commit economic crimes and abuse of office.

Ngugi, who was appointed in October, said the company had tried to limit the damage by immediately replacing all the key managers who had been charged. ($1 = 101.0500 Kenyan shillings) (Additional reporting by and writing by Duncan Miriri Editing by Emelia Sithole-Matarise)

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