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Kenya Power revenues hit as rural homes use Sh3.30 daily

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Kenya Power revenues hit as rural homes use Sh3.30 daily


Kenya Power

Kenya Power Managing Director Bernard Ngugi during an operation to curb illegal connections and theft of electricity in Huruma, Nairobi on March 15, 2021. PHOTO | DIANA | NGILA | NMG

Millions of Kenya Power #ticker:KPLC rural customers are spending a paltry Sh3.34 daily on electricity in what has failed to lift the sales of the utility firm in tandem with the sharp increase in connections to the national power grid.

The average monthly electricity consumption of rural households connected to the national grid is a six-kilowatt hour (kWh) that is currently valued at Sh100.45 or Sh3.34 a day, Kenya Power shareholder disclosures show.

Homes that use six-kilowatt hours (kWh) of electricity or less every month indicate that a majority of them use electricity for charging phones and controlled lighting.

They are likely not to plugged gadgets like fridges, TV, cookers, microwaves and electric heaters, key drivers of power use in homes.

This reveals the low living standards among a majority of Kenyan households, especially in the rural areas and urban slums that have recently been connected.

The utility says the rural consumers have failed to lift its sales with the firm relying on industrial consumers and wealthy urban dwellers to power revenues.

Power sales have increased 39.3 percent since 2012 when the number of those connected to the grid jumped 271.7 percent.

“[A] majority of the new connections are for domestic rural customers under the last mile programme. The consumption of these customers is on average about six units per month, which explains the low revenues,” Kenya Power told investors via its digital shareholder question and answer session.

“The company is undertaking customer awareness and education to promote the use of electricity aimed at driving demand.”

Kenya has expanded electricity penetration across the country, particularly in rural areas, over the past decade under the Last Mile Connectivity Project.

This scheme connected homes living close to Kenya Power transformers at a subsidised cost of Sh15,000.

The project, which is funded by donors such as the African Development Bank, also brought transformers and power lines to zones that had little economic value for Kenya Power to commit billions of shillings for grid development.

Poor homes got connected without paying an advance fee, with charges recovered monthly over a period of 36 months.

The low-cost project has been a key plank of the Jubilee government’s energy policy in expanding power access.

The government says the Last Mile project removed a major hurdle to the acceleration of rural electrification and spurred village economies as residents open businesses such as welding, barbershops, eateries and cyber cafés.

Kenya Power says sales from this region have been sluggish and is now shifting focus to connecting what it calls quality customers like schools, hospitals and pubs.

“The company will intensify sales growth through increased connectivity targeting premium customers by offering deferred payment arrangements and accelerated connection times.”

Kenya Power data shows the rural households have cut the average consumption per customer by nearly a third over the past decade.

On average, Kenya Power received Sh1,565 per customer in the year to June last year, down from Sh3,910 in 2012.

The government subsidy boosted electrification and removed darkness from many villages.

This has increased Kenya Power’s customer base from about 2.03 million in 2012 to 7.57 million in the year to last June.

Most are, however, in remote areas and slums with low consumption levels since their power use is limited to lighting and charging phones, and playing small electronic appliances.

Kenya Power has also struggled to recover the connection fees, which is supposed to be repaid monthly over three years when paying bills.

Some homes have switched to solar or reverted to kerosene lamps to avoid paying the connection fees, further cutting the average consumption per home.

The power distributor’s low voltage network has increased from 73,594 kilometres to 243,207 kilometres over the past seven years tied to rural electrification. An expanded network has come with increased costs, especially maintenance fees.

Lower than expected consumption from rural Kenya has also left Kenya Power with excess electricity from generators like KenGen and many other independent power producers.

Under the typical power purchase agreement, a power producer gets paid for electricity produced, even if it is impossible for Kenya Power to sell it to consumers due to excess capacity and other reasons.

This has in part pushed Kenya Power into losses with the utility having made a pretax loss of Sh7.04 billion for the year ended last June.

President Uhuru Kenyatta has set up a team to review power purchase agreements signed over the years by Kenya Power in efforts to keep the firm profitable.

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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.

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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.

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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


Cotu boss Francis Atwoli

Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.

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