Kenya Power defends Sh380 million new ‘special’ vehicles

Kenya Power, the electricity distribution monopoly, has defended a deal to acquire 64 new vehicles from four auto dealers at a cost of Sh380 million.

The partly State-owned firm, which is eyeing an improvement of its financial position, said the cars were not leased but acquired fully because of their special “technical” requirements.

President Uhuru Kenyatta’s administration has turned to vehicle leasing to boost the capacity of the police service and other agencies in what has come as a boon for leasing firms, financiers and auto dealers.

“The 64 vehicles budgeted for will be procured on outright purchase basis due to the technical specifications’ and customisation required. All requisite justifications and approvals from the government were sought before the procurement process,” said Kenya Power acting chief executive Jared Othieno in response to Business Daily queries.

“An efficient fleet allows us to secure revenues by facilitating swift response in the event of network challenges. In this particular tender, we are procuring 64 Four Wheel Drive specialty vehicles among other units for deployment in our operations and maintenance divisions. These vehicles are equipped with advanced safety and engineering tools.”

Mr Othieno said the new units will be deployed across the country to support Kenya Power’s newly launched 148 feeder-based units operating model that decentralises services.

“The ongoing procurement of a new and modern fleet of vehicles from the successful tenderers Ms Toyota Kenya, Simba Corp and Isuzu East Africa at Sh380 million, is therefore part of our organisational endeavours to enhance our operational and technical efficiency by deploying resources and adopting technological innovations,” said Mr Othieno.

The listed firm has been left in a financial tight spot after it breached the terms attached to Sh59.6 billion worth of its loans.

Consequently, it has been seeking to secure fresh short-term loans to refinance similar debts on a longer tenor.

“The ongoing procurement has been properly budgeted for and will not in any way strain our financial position,” said Mr Othieno.

Despite revenue rising by 4.23 percent to Sh125.8 billion on increased customer base, increased power purchase and higher finance costs depressed its bottom-line.

Power purchase costs, excluding fuel and foreign exchange, increased by Sh2.59 billion to Sh52.79 billion in the period.

Kenya Power said last November that it had opened talks with its creditors to extend the payment period for segments of its loan obligations maturing in the current financial year.

“We are beginning to renegotiate part of the loans and convert them into long-term debt to bridge the negative liquidity gap,” Mr Othieno said in an earlier brief.