Kenya Power to Charge Some Customers in US Dollars

Kenya Power has received approval from the Energy and Petroleum Regulatory Authority (Epra) to bill certain customers in US dollars, marking a significant shift aimed at mitigating foreign exchange losses. 

The state-owned power distributor reported a net profit of Ksh319 million in the half-year to December 2023, a remarkable recovery from a net loss of Sh1.14 billion over a similar period the previous year. 

However, forex losses more than doubled to Ksh15.02 billion during the same period due to the weakening of the Kenya Shilling against major currencies. The long-awaited approval thus comes as a major win for the company that seeks to mitigate the costs associated with a weaker local currency. 

To address concerns about the legality of billing in foreign currency, Kenya Power assures that only willing customers will be billed in USD, Euros, or Sterling pounds, with agreed-upon exchange rates. 

According to the power distributor, this particularly benefits sectors like fresh produce exporters who often earn in foreign currency and struggle with currency conversions to settle bills.

As one of the largest buyers of foreign currency in Kenya, Kenya Power requires significant amounts of foreign currency monthly for power purchases and loan repayments.

The company plans to opportunistically settle forex obligations during periods of currency strength and is exploring strategies like balance sheet restructuring to mitigate losses. 

In Summary:

• Government approval granted to Kenya Power to bill some customers in US dollars.
• Accounts being set up for collection of electricity bills in USD, Euros, and Sterling pounds.
• Customers willing and able to pay in foreign currency can now do so.

Read Also: Epra Moves to End Kenya Power Monopoly - Money Weekly News

Kenya to Lose Oil Millions as Uganda Chooses Tanga Port

Uganda's decision to explore fuel imports through Tanzania's Port of Tanga instead of Kenya's Port of Mombasa amid a dispute with Kenya has put Kenyan oil dealers in crisis mode. 

Despite initial talks with Tanzania and the consideration of Dar es Salaam's port, Uganda's focus on Tanga promises cost savings due to its shorter distance to Kampala. This potential shift threatens significant consequences for Kenyan oil companies, particularly smaller dealers reliant on the transit market.

Roughly a third of Kenya's fuel imports, averaging 200 million litres monthly, are destined for transit, making it a crucial economic segment. Kenya faces the loss of a major source of foreign exchange if the transit market diminishes, while the Kenya Pipeline Company stands to lose revenue from depot tariffs. 

Read Also: Kenya Begins Privatisation of 11 State-Owned Companies - FULL LIST

The dispute originated from Uganda's move to designate its national oil company as the sole fuel importer and subsequent legal action against Kenya.

In Summary:

• Uganda opts to negotiate fuel imports with Tanzania over Kenya due to a dispute with Nairobi.
• Initially Uganda was considering the Port of Dar es Salaam, but has now shifted focus to Port of Tanga.
• Shorter distance from Tanga to Kampala compared to Mombasa to Kampala results in cost savings for Uganda.
• Kenya stands to lose a major source of foreign exchange if the transit market diminishes
• Kenya Pipeline Company faces revenue loss from depot tariffs without transit market demand.
• Dispute arises from Uganda's decision to designate Uganda National Oil Company as sole fuel importer.
• Uganda's application to Kenya's Energy and Petroleum Regulatory Authority was declined leading to legal action at the East African Court of Justice.