Kenya: Chinese Firm Wins Sh740 Million Kenya Power Meters Tender

20 January 2020

Chinese firm Shenzhen Star Instruments Company has won a Sh746.2 million tender to supply single phase prepayment meters to Kenya Power..

The electricity distributor reveals in the tender awards that the Chinese company, with local directors, will deliver the meters as the utility firm continues connecting more people to the grid.

Electricity sales revenue for customers on prepaid metering is recognised when customers buy electricity units and then adjusted for the estimated amount of unconsumed power based on the consumption rate over a period of time.

The cash-strapped firm expects to add more customers through the return of its Last Mile Connectivity Project (LMCP) that links homes to the national grid under a subsidised programme.

The award comes barely two weeks after inviting bids for supply of nearly 200,000 post-paid meters, signalling that it favours a mix of prepaid and post-paid meters.

This is in contrast to earlier plan to completely switch to prepaid meters to reduce mounting customer debt.

Shenzhen Star had in 2017 bid for another tender worth Sh1.25 billion to design, supply and install an advanced metering system to Kenyan Power but lost to rival Chinese firm ZTE Corporation.

LAST-MILE CONNECTIVITY

The directors of Shenzhen Star are listed as Ronald Kingeru Kaburia, Netfast Communications Ltd and Vigelo and Gelo Construction Ltd.

Mr Kaburia, who is in charge of Shenzhen Star operations in Kenya, said last year that the firm would build a manufacturing facility at Tatu Industrial Park beginning fourth quarter of 2019.

Kenya Power's LMCP was launched in 2015 to scale up connectivity in rural and peri-urban areas by providing subsidy for grid extension to enable customers get electricity supply at affordable cost.

This has seen more people join the grid.

However, the monopoly's performance has dwindled in recent years despite rising customer numbers.

PROFIT WARNINGS

It has issued back-to-back profit warnings as earnings tumbled to 10-year lows.

It now expects net profits for the year ending June 2019 to be more than 25 percent lower than the Sh1.92 billion after-tax profit posted in the prior year.

The firm said this was due to an increase in non-fuel costs in line with the company's long term strategy to grow cheaper and cleaner renewable energy.

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