Corona cuts electricity use by 14pc

Consumption of electricity dropped 13.2 percent or by 129.5 million units last month as the global coronavirus pandemic hit consumer demand and forced firms and industries to cut back on their operations.

The Energy and Petroleum Regulatory Authority (EPRA) said electricity consumption dropped from 978.1 million kilowatt-hours (kWh) in March to 848.6 million kWh in April—the lowest monthly use of power in 32 months.

This is the first full month data on power consumption after Kenya imposed a daily dusk-to-dawn curfew on March 27 and restricted movement in and out of four counties worst hit by the pandemic, including Nairobi.

The electricity regulator has linked the drop to reduced consumption by industrial and commercial users, who account for 70 percent of Kenya Power unit sales.

EPRA, however, said that consumption of electricity by domestic customers had increased as employers increasingly ask staff to work from home in the wake of the Covid-19 pandemic, which has drastically changed the way business is conducted.

“Electricity demand is expected to be lower compared to last year due to the impact of the Covid-19 pandemic,” EPRA said.

Power consumption is often an indicator of the number of electrical equipment plugged into the national grid — including industrial machinery — pointing to economic output.

It may also be the result of increased use of home appliances such as TV sets, microwaves and refrigerators, whose use has increased in line with State instructions for people to stay at home and avoid public gatherings.

The electricity consumption data tallies with the Market Stanbic Bank Kenya Purchasing Managers’ Index (PMI)—which tracks business performance in the manufacturing and services sector and fell to 34.8 in April from 37.5 in March and 49.0 in February.

Readings above 50.0 signal growth in business and the latest data is just shy of the record low of 34.4 reported in October 2017, just weeks after Kenya had come out of two presidential elections.

April’s electricity consumption passed the lowest level of 842.8 million kWh reported in August 2017, when Kenya was preparing for the August 8 presidential election that coincided with reduced economic activity.

Kenya has so far confirmed 912 positive cases of Covid-19 and 50 deaths, and the government has imposed restrictions including the nationwide dusk-to-dawn curfew, closure of bars and schools to curb its spread. Kenya reported its first coronavirus case on March 12.

The impact of social distancing and closure of businesses like bars and restaurants has impacted on consumer spending, setting the stage for job cuts and unpaid leave for workers struggling with reduced cash flow.

Vimal Shah, the chairman of Bidco Africa, a giant consumer goods maker, said overall demand had softened as a result of the closure of hotels, restaurants, eateries and catering establishments. There has, however, been an uptick in demand for essentials such as foodstuffs, sanitiser and soap, he added.

“Demand from Horeca (hotels, restaurants, eateries and catering) segment has gone to completely zero because there are no parties, no events. However, there’s demand from the home segment with people buying from supermarkets, shops and the dukas (kiosks), but this is limited to essentials,” Mr Shah said on phone. “With time, we are going to see whatever is not selling and stop producing, and focus on whatever is selling. So you cut off a lot of things that people can do away with.”

The Stanbic Bank report says contraction in output in April was “sharp”, citing a “steep drop in demand as customers remained fretful about the spread of Covid-19”.

The forecast drop in electricity consumption look set to delay the turnaround of Kenya Power, which last year reported its worst profit in 16 years.

The firm’s net profit plunged 92 percent from Sh3.26 billion to Sh262 million in the year to June — the lowest profit since it returned to profitability in 2004 after posting Sh2.89 billion loss the previous year.