ENHANCING CONNECTIVITY THROUGH
AFFORDABLE CONNECTION SCHEMES
Presented to the Organization of Africa Electrification
Initiative (AEI)
Practitioner Workshop, Dakar, Senegal
By:
Eng. Joseph K. Njoroge, MBS
Managing Director & CEO
1/27/2012
1
November 14-16,
2011
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OUTLINE
Kenya Power’s Vision, Mission and Strategic Pillars
National Outlook
8 Years Customer Base Growth
Barriers to Connectivity
Stimulating Connectivity
A Case Study on Kenya Power’s Revolving Fund
Comparison between Equity StimaLoan & Kenya Power
StimaLoan
2
Kenya Power’s Vision, Mission & Strategic Pillars
3
National Outlook
Electricity infrastructure has been identified as one of the
pillars that will facilitate the Government of Kenya achieve
its Vision 2030 objective of transforming Kenya into a
middle-income economy.
Thus the G.o.K is to increase electricity access rate to 40%
by 2020 from the current 29%.
In tandem with this objective, Kenya Power has in its 5 year
Corporate Strategic Plan, to achieve a customer base of
3Million by 2016 from the current total of 1.8million.
For the 2011/12 financial year, the target is to connect
300,0000 customers.
8 Years Customer base Growth
There has been a steady increase in customer base owing to a
number of connectivity enhancement initiatives
Barriers to Connectivity
Internal wiring costs (Readyboard solution)
Equitable distribution of costing/pricing
Capacity to construct the network
Scattered clusters of customers far from network
Unplanned developments
Wayleave acquisition
Stimulating Connectivity
Name of Initiative
Description
Connection Charges
Umeme Pamoja
Targets a cluster of potential
customers in peri urban areas. A
supply network is designed based
on potential and core customers.
The customers equally share the
cost of connection.
Average connection fees is
USD 550 (Kshs. 55,000) to
USD 700 (Kshs. 70,000)
Line Maximization
Entails installing transformers in
high density areas (e.g. market
centres, residential clusters, etc.)
traversed by power lines to tap
and maximise potential in the
existing network. The target
customers share the cost of
electricity connection
Average connection fees is
USD 550 (Kshs. 55,000) to
USD 700 (Kshs. 70,000)
Stimulating Connectivity
Name of Initiative
Description
Connection Charges
Transformer
maximization
Targets potential customers who are
within a radius of 600m from an existing
transformer.
Total Single Phase
charges- Minimum of
USD 350 (Kshs. 34,980)
Total Three Phase
charges-Minimum of
USD 490 (Kshs. 49,080)
GPOBA People
Settlement
Electrification
Project
Targets 66,000 Connections.
Project to improve livelihood of Kenyans
in people settlements by providing them
with safe electricity at subsidized
connection rate. This being facilitated by
World Bank and International
Development Association who reimburse
USD 150 and USD 75 respectively per
connection.
Single phase charges USD 12 (KShs 1,000 +
16% VAT)
Three phase charges USD 22 (KShs. 2,000 +
16% VAT)
All customers are on
Pre-Paid metering.
There is also the option
of using readyboard
units
Stimulating Connectivity
Name of Initiative
Description
Connection Charges
Rural
Electrification
RE implemented by REA
and funded by the
Government and Donors
(e.g. AFD)
Single phase Market
centers
Customers in the rural
areas are connected using
subsidized rates and pay in
installments for a period of
one year. The charges are
VAT inclusive but do not
include Kenya Power
metering costs of USD 25
and USD 50 for single and
three phase customers
respectively.
USD 174 (KShs. 17, 400)
The customer pays USD
50 (KShs 5,000) deposit
and the balance in 10
monthly installments
Three phase Market
centers
USD 464 (KShs. 46, 400)
The customer pays USD
100 (KShs 10,000)
deposit and the balance
in 10 monthly
installments
Single phase
USD 325 (KShs. 32, 480).
Eligible for KPLC/Equity
StimaLoan.
Three phase
USD 464 (KShs. 46, 400).
Eligible for KPLC/Equity
StimaLoan.
These customer also wire
their premises using
readyboard units.
Stimulating Connectivity
Name of
Initiative
Description
Connection Charges
StimaLoan
Service innovation entails
providing Equity StimaLoan
credit facilities to customers for Customer services the
loaned amount of USD 350
electricity connection.
(Kshs 35,000) at interest of
15% per annum over a
Currently there are two types:
Equity StimaLoan- wholly managed by period of 36 months.
Equity Bank. 3,800 customers have been
connected since its inception 2 years ago. KPLC StimaLoan
KPLC StimaLoan- wholly managed by Customer is loaned 80% of
Kenya Power. 19,000 customers have the capital contribution and
been connected since its inception 1 year services the same over a
period of 24 months.
ago.
2% administration fee is
charged on the loaned
amount.
Case Study of KPLC’s Revolving
Fund (KPLC StimaLoan)
A National Revolving Fund was recommended following a socioeconomic survey in 2006 by a consortium of consultants; Electricite De
France (EDF), Axenne and Aberdare Engineering Ltd.
The survey was part of a preliminary study funded by the Agence
Francaise Development (AFD) under Energy Sector Recovery Project, to
review KPLC’s Customer Connection Policy and Market Share
Expansion Strategy in urban and peri-urban areas.
The Study delivered an updated Connection Policy currently in use.
The market survey found that majority of the target customers could
not afford to pay the average connection fee of USD 350 (KShs.34,980)
upfront.
Case Study of KPLC’s Revolving
Fund (KPLC StimaLoan)
The potential customer base requiring assistance through deferral of the
connection fee corresponded to 640,000 customers.
The findings of this study were consistent with three research papers done
previously by World Bank, AFD and Research Solutions which highlighted the
need for availing credit facilities to our customers, in order to achieve
connectivity targets.
Hence the Consultants recommended that KPLC should implement a National
Revolving Fund (RF), targeting the low income segment of the market.
The Fund, initially targeting 13,575 customers, has been implemented on a pilot
basis with an aim of rolling it out into a National Revolving Fund.
AFD has funded the kitty with an initial amount of Euros 6 million out of which
Euros 4.5 million and Euros 1.5 million will be utilized for KPLC and REA
customers respectively.
Case Study of KPLC’s Revolving
Fund (KPLC StimaLoan)
Since its implementation one year ago, 19,000 customers have benefited
from the fund and are now connected.
The main challenge experienced so far is following up on customer loan
repayments attributed mainly to the inconvenience of making the
repayments.
Most of the customers reside in peri-urban areas and find it costly to
travel to a Kenya Power Office to make their installment payments.
Various initiatives are underway to facilitate various pay points for the
customers to make their loan repayments including through their mobile
phones.
Comprehensive rollout of KPLC StimaLoan utilizing AFD’s Euro 31
million is underway.
Comparison between Equity Bank
StimaLoan & KPLC StimaLoan
Item
No.
Terms
Equity Bank StimaLoan
KPLC StimaLoan
1.
Target Market
All customers regardless of
whether rich or poor so long as
they can meet terms and
conditions of bank
Customers who cannot pay for
capital contribution at once but can
afford to pay 20% upfront and 80%
in 24 installments.
2.
Size of fund
Unlimited
Euros 4.5 million
3.
Upfront deposit
30% upfront
20% upfront
4.
Interest rate
15% on reducing balance
2% administration fee
5.
Repayment
period
Maximum 36 months
Maximum 24 months
Comparison between StimaLoan
Equity Bank & KPLC StimaLoan
Generally, the customers find the terms and conditions of
the bank stringent hence the low uptake for the Equity
StimaLoan (3,800 connections) as compared to KPLC
StimaLoan (19,000 connections).
Pata Stima, Lipa Pole Pole
In Conclusion…
KPLC is committed to increasing electricity access rate to
40% by 2020.
This will empower Kenyans socio-economically.
Will also supplement Govt. efforts in attaining;
 Vision 2030 goals
 Millennium Development Goals
THANK YOU
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