Safaricom expects to earn Ksh53 Billion from installing and operating smart meters for the Kenya Power and Lightning Company’s (KPLC) most important clients – large consumers who account for over 80% of Kenya Power’s sales.
The move is meant to stem inefficiencies and energy losses which have long been attributed to outdated power transmission infrastructure and operational challenges. Many industrial consumers have been prioritizing generation of their own power in recent years in response to the blackouts and energy losses, with solar emerging as a preferred option for many.
The plan is for Safaricom to install a smart meter system worth Ksh33 Billion. It would link 330,000 metres to a centralized platform with capabilities including enabling remote reading of metres, tracking power use, power outages and load on transformers.
Information contained in Kenya Power’s board papers further revealed that the telco is expected to recoup its investment in four years and transfer the system to Kenya Power after eight years.
“This solution is expected to result in a turnaround of Kenya Power’s current financial position by reducing energy losses…In addition, it will improve collection, increase business operational efficiency and enhance cost efficiency,” the papers read in part.
Senior figures within Kenya Power, however, are pushing for further review of the revenue share agreement between Kenya Power and Safaricom arguing that the terms, a 25:75 split of additional revenues from stemmed system losses, favor the telco.
At present, Kenya Power places system losses – power purchased from generators that does not reach consumers – at 29.3%. Installation of the smart system is expected to bring the figure down to 8%.
This would earn Kenya Power Ksh71 billion in additional revenues over eight years.
Safaricom would take 75 percent (Ksh53 billion) while Kenya Power would take the remaining Ksh17.9 billion (25 percent).
“Safaricom will have recouped its full cost in year four hence the need for a further discussion on the revenue uplift sharing proportion,” noted Kenya Power’s general manager for business strategy Martin Mutuku in a preliminary report.