More pain than gain: How standards dropped at Kenya Power, unnoticed

The ultimate outcome of once a darling of the Nairobi Securities Exchange (NSE) – and the results that heralded it – have significantly hurt Kenya Power and Lighting Company (KPLC) or simply Kenya Power without solving the underlying challenges throttling the utility firm.

The story of Kenya Power, depicts a company that reached dramatic heights only to face an excruciating tumble.

Its fated failures and unusual decisions continue to shock the public and industry observers alike, with the latest CEO appointment – the sixth in six years, shows just how horrible things have unfolded at the country’s sole electricity distributor.

The mess at the firm – headquartered on Kolobot Road in Parklands, portrays just how low the standards have dropped at the company that began the year with a share price of Sh1.75 but has since lost 20 percent off that price valuation, ranking at position 56 on the NSE in terms of year-to-date performance, losing 10 percent of the stock’s value from April 13 to date.

“We wish to inform our shareholders that the Board of Directors of the Kenya Power and Lighting Company PLC, has appointed Eng. Geoffrey Wasua Muli as the Acting Managing Director with effect from 17th May 2022 in the place of Eng. Rosemary Oduor who was serving in an acting capacity. Eng. Oduor is proceeding on a well-deserved annual leave,” read in part a surprise company statement last week.

To this day, many wonder how such a powerful business disintegrated almost overnight.

Also difficult to fathom is how the firm’s Board has been hiring and firing its CEOs – and more worryingly putting them in ‘acting capacity’ over extended periods without confirmations.

“There is a stark link between the company’s performance and the instability in appointments. There has been a tendency by certain board members putting these CEOs in acting capacity without confirming them and this has a demoralizing effect which has a negative bottom line to the firm’s revenues,” offered Ben Chumo in a telephone chat that lasted almost two hours.

Chumo, now the Chairman of Eagle HR consultants served at the company as its CEO for 5 years before calling it a day.

At Kenya power’s peak, the firm’s after tax profit flew by 52 percent in a single half-year period to register a remarkable Sh6.408 Billion between July and December 2014 from Sh4.19 Billion it announced in a similar interval a year earlier.

That half-year trading result was attributed to increased sales as a result of improved power supply and upsurge in connectivity sustained by tariff increase that had been achieved a year earlier.

In the financial year 2016/17 the firm reported a profit before tax (PBT) of Sh12.1Billion – the best the company has managed yet.

At the wheel was Dr. Ben Chumo – a Human Resource practitioner by training who took over the reins in June 2013 from his role as the company’s Chief Manager, Human Resources and Administration – initially in an acting capacity to replace Eng. Joseph Njoroge who was elevated to the firm’s parent office as Principal Secretary, Ministry of Energy and Petroleum.

Upon his confirmation, Chumo would then serve in the same role until January 2017 when he bowed out after attaining the age of 60.

In came the company’s General Manager in charge of finance, Ken Tarus also in an acting capacity who only lasted one and half years before he was ousted out on graft allegations.

Tarus got his matching orders following summons over corrupt dealings amounting to more than Sh 4.5 Billion which also implicated 40 senior executives of the company.

The tender in question had however happened in 2012, meaning Tarus was not in charge when the offense took place – but he left the company anyway.

Bernard Ngugi – the company’s General Manager in charge of supply Chain was delegated those roles, replacing Tarus in a decision the company said had resulted from “a competitive recruitment process.”

“Stability is key in any organisation, without stability from the board and management, the company will continue to post losses,” added Chumo, who blames the situation on lack of continuity with most individuals entering the company clueless of the firm’s ways of working.

Ngugi’s surprise departure and whose appointment took effect on October 28, 2019 left many including oblivious top management in awe.

He who took over from Eng. Jared Othieno who had been in the same position albeit in an acting capacity, had worked with KPLC for over 30 years in different capacities, mysteriously resigned owing to pressure from trade unions and other stakeholders over the firm’s turn around plans amid a streak of losses.

Until the appointment of Geoffrey Waswa Muli last week as the new acting CEO of Kenya Power, who previously acted as the general manager in charge of regional coordination, Rosemary Oduor had assumed the role since August last year as Mr. Ngugi’s replacement.

During her short tenancy, Ms. Oduor laid out five core strategic areas which included growing sales, stepping up of revenue collection, enhancing system efficiency, managing cost, and improving customer experience to boost profitability in a turnaround plan following never-ending public complaints over power failures and high tariffs.

The result of that turn-around strategy led to the company posting a net profit of Sh3.82 billion for the six months to December 2021, a huge improvement from the Sh138.36 million it made over a similar period in 2020.

It also attributed that growth to increased collections from some of its big customers who had huge power bill arrears, including government entities. This is after President Uhuru Kenyatta had announced that the cost of electricity would reduce by at least 15 percent in a bid to address those concerns.

The firm announced unaudited profit before tax of Sh5.6 billion in March for the half year trading period ended December 31, 2021 on increased sales, enhanced system efficiency, and decreased operating cost.

In fact, the firm posted its first loss in 17 years – a net loss of Sh2.98 billion in the financial year which ended in June 2020 on reduced electricity consumption due to coronavirus control measures and the rising cost of buying wholesale power from firms like KenGen.

In October last year, an audit and oversight team was put in place to supervise the loss-making power distributor days after the state-controlled firm was ordered to stop any ongoing power purchase agreement negotiations.

For starters, Kenya Power had 15 CEOs between 1922 and 2014. Meaning each CEO served for an average of 6 years and 4 months, equivalent to two terms with the 4 months offered to any CEO in an acting capacity.

By law an individual in that role is allowed to act for at least 6 months before they are confirmed.

Written By STEVE UMIDHA