Tuesday, April 01, 2008

KPLC: What way forward?

I've avoided KPLC because the share has a big unresolved issue. Those are now three.
  1. Management: GoK has decided not renew Manitoba management contract. I thought the contract was ill-thought-out, not unlike many other agreements that we tend to sign with expatriates. Manitoba didn't actually deliver on any of the targets that they were set among them reducing transmission loses and increasing customer base (120,000 new customers is not a target-Safaricom and even Equity have all grown customers very fast over a short period of time). However, GoK interference in KPLC affairs was reduced by having Manitoba there instead of some of the abysmal characters we had in the past. Will their exit mark a return to the bad old days? CT thinks so, but I think we are now past the situation where GoK carries non-performing parastatals. I think Manitoba's biggest failure was to not break KPLC into two companies one which would exclusively do rural electrification and another to deal with urban.
  2. Transmission losses: KPLC loses something like 20% of the electricity it buys from KenGen and others. Imagine a supermarket having to write-off 20% of its stock or a bank losing 20% of customer deposits.
  3. Liberalisation of distribution- I've done a post on this before. I think KPLC like Telkom Kenya dearly misses competition in distribution so it can raise its game.

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