A Chinese firm plans to construct a factory in Kenya for prepaid meters to supply power utility firms in East Africa as it eyes big cash from the expanding billing market.
Kenya Power chief executive Ben Chumo says the firm has sought the electricity distributor’s advice on how to align their production with local market specifications.
Kenya Power has welcomed the move, citing lower costs for Kenyan made devices and employment opportunities. “Units made locally will be cheaper, translating to overall reduced costs,” Dr Chumo said, adding that Kenya Power seeks to source all of its materials locally.
He did not disclose the name of the company but said it plans to use the Kenyan factory to supply regional markets. The firm imports transformers and prepaid meters from China and India and sources from the local market poles, cables and connectivity devices as part of the buy-Kenyan-build Kenya campaign.
The Nairobi-bourse listed electricity distributor is keen to grow usage of prepaid meters to reduce electricity defaults and cut operation costs, especially in the countryside. Kenya Power reckons the prepaid billing system is key to boosting its cash flow and cutting postage costs in issuance of monthly invoices to post-paid customers.
It will also eliminate the need for more meter readers. Dr Chumo said that 70 per cent of its 4.9 million customers are on prepaid and smart meters, the later targeting large power consumers like industries.
He said the company plans to connect all customers to prepaid meters. Consumers on prepaid meters pay for power in advance, similar to mobile airtime top-ups, helping Kenya Power receive its revenues in full.
The electricity distributor booked a 16.4 per cent drop in net profit to Sh3.7 billion in the half year to December on increased expenditure costs. The firm has invited expression of interest from local investors to enter joint ventures with foreign firms to start manufacturing transformers locally.
This comes in the face of growing mass connections of homes to power following the cut in connectivity fee from Sh35,000 to 15,000 for buildings located within 600 metres to the nearest transformer.
Kenya Power in 2011 announced plans to establish a transformer manufacturing plant in Kenya to help the country meet growing demand for power and diversify its earnings.
Tanzania’s Tanelec designs and manufactures distribution transformers at its plant near Arusha under licence to the world’s leading transformer manufacturer, ABB of Switzerland.
Currently, Kenyan firms have only the capacity to repair transformers.