presentation to stakeholders conference on kplc 5...

PRESENTATION TO KPLC PRESENTATION TO KPLC STAKEHOLDERS CONFERENCE ON STAKEHOLDERS CONFERENCE ON STAKEHOLDERS CONFERENCE ON STAKEHOLDERS CONFERENCE ON

THE 5 YEAR CORPORATE THE 5 YEAR CORPORATE STRATEGIC PLAN STRATEGIC PLAN STRATEGIC PLAN STRATEGIC PLAN

2011/12 TO 2015/162011/12 TO 2015/16

By By Eng. Joseph K. Njoroge, MBS Eng. Joseph K. Njoroge, MBS Managing Director & CEOManaging Director & CEO

Kenya Power & Lighting Co. Ltd.Kenya Power & Lighting Co. Ltd.

13th April 2011

Kenya Power & Lighting Co. Ltd.Kenya Power & Lighting Co. Ltd.

13 April 2011

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Contents

IntroductionVision Mission Values and ObjectivesPillars of the New Vision and MissionMeasures of SuccessElectricity Sub‐Sector StructureRegulatory EnvironmentLessons from the Past 5 YearsSWOT AnalysisContribution to the Vision 2030 Economic PlanKey Power System StatisticsDemand and Generation OutlookElectricity Distribution PlansCustomer Services Improvement PlansKPLC Diversification StrategyFinancial Plan

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Conclusions

IntroductionIntroduction

The Kenya Power and Lighting Company Ltd is a key player in the electricity sub sector with the mandate to purchase bulk electricity supply, generate in off‐grid areas, transmit, distribute and retailsupply, generate in off grid areas, transmit, distribute and retail electricity to end use customers throughout Kenya.

The 5 Year Corporate Strategic Plan reflects the Company’s efforts to analyse the operating environment and develop medium termanalyse the operating environment and develop medium term corporate operational and financial strategies that are in harmony with stakeholder interests and which strive to achieve corporate goals.goals.

The KPLC Stakeholders Conference is intended to present the highlights of the Strategic Plan to the company’s major stakeholders so as to discuss their concerns in regard to electricity supply and toso as to discuss their concerns in regard to electricity supply and to address these concerns in the final plan.

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Ministry of Energy (MOE) – sectoral policy, supervision and interventions

Electricity Sub‐Sector Players Electricity Sub‐Sector Players

interventions

Energy Regulatory Commission (ERC) – Enforcing regulations, licensing power companies, customer protection, approving Power Purchase Agreements and Tariff ReviewsPower Purchase Agreements and Tariff Reviews

Energy Tribunal – Resolution of disputes in the energy sector

Kenya Electricity Generation Company (KenGen)– Largest electricity generation company that is majority Government owned

Kenya Power & Lighting Company Ltd. (KPLC) – Generation at off‐grid stations, power purchase, transmission, distribution and retail sales of electricity

Rural Electrification Authority (REA) – Implementation of the Rural Electrification Program (scheme construction)

Kenya Electricity Transmission Company Ltd. (KETRACO) ‐Development and ownership of new transmission lines

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Independent Power Producers (IPPs) – Private sector power generation companies selling bulk power to KPLC

Electricity Sub‐Sector Players contd.Electricity Sub‐Sector Players contd.

Geothermal Development Company – established in 2009 to

y yy y

develop geothermal steam fields for subsequent use in geothermal electricity generation by generation companies

Cross Border Electricity Trade

Uganda Electricity Transmission Company Ltd (UETCL) – an external electricity trader interconnected to Kenya by a 132kV y y ytransmission line who import from and export electricity to Kenya

Tanzania Electricity Supply Company (TANESCO) – an external electricity trader supplying and importing across border y pp y g p gelectricity to border towns.

Ethiopia Electric Power Company (EEPCO) – cross border electricity supply

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electricity supply

Vision, Mission & Strategic PillarsVision, Mission

& Strategic Pillars& Strategic Pillars& Strategic Pillars

Vision : to provide world class power that delights our

customers

People Innovation Financial

Corporate Social Responsibility & Governance

Diversification

Customer Service

Sources of Power

Customer Service & Marketing Robust Network

Mission : Powering people for better lives

Core values: Customer First; One Team; Passion; Integrity, Excellence 7

Corporate ObjectivesCorporate Objectivesi. To improve delivery of customer services.p y

ii. To achieve financial stability and sustainability.

iii. To give reasonable return to shareholders for their investment.

iv To improve transmission and distribution efficiencyiv. To improve transmission and distribution efficiency.

v. To improve electricity supply quality to exceed customer expectations, reduce cost of doing business and increase sales revenue.

vi To expand and maintain a robust electricity system infrastructure at thevi. To expand and maintain a robust electricity system infrastructure at the least cost possible.

vii. To accelerate customer connectivity.

viii To build internal capacity with integrity to enable the Company toviii. To build internal capacity with integrity to enable the Company to achieve its mandate.

ix. To modernise operations through automation in order to enhance efficiency

x. To carry out innovation in all business spheres to enhance efficiency and service quality

xi. To facilitate and promote investment in green energy

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xii. To leverage on existing assets for business diversification

Key Measures of SuccessKey Measures of SuccessKey Measures of Success Key Measures of Success

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Key Measures of Success Contd. Key Measures of Success Contd.

Note: This includes:1. 60MW Emergency Power in 2009/10 and 2010/112 Current Peak Demand is 1178 MW recorded in January 2011

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2. Current Peak Demand is 1178 MW recorded in January 20113. 26MW Mumias Generation is non‐firm power4. Demand is suppressed by about 112MW5. Hydro generation is dependent on hydrology

Key Measures of Success Contd. Key Measures of Success Contd.

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The Regulatory Environment

Companies Act (Cap 486)State Corporations Act

The New Constitution of

KPLCNairobi Stock Exchange Listing ERC Regulations

Constitution of Kenya

KPLCC it l

g gRules

C egu at o s

Energy Act 2006

Capital Markets Authority Act

Environment Management & Coordination Act

Public Procurement & Disposal Act

Grid Code

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Lessons From Past 5 YearsLessons From Past 5 Years

Profit before Tax Sales GWh

T t l N b C t A tTotal Assets Total Number Customer Accounts

Compounded Annual Growth Rate (CAGR) computed upto 30 June 2010.

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Distribution Efficiency Eff ti C it V

Lessons From Past 5 Years Continued Lessons From Past 5 Years Continued

83%84%85%

ySales as % of Power Purchase

2,000.00

2,500.00

Effective Capacity Vs. Constrained Peak Demand

ProjectedActual

79%80%81%82%83%

500.00

1,000.00

1,500.00

MW

Actual

78%-

Interconnected Effective CapacityPeak Demand

8.010.0

Average Repair Outage Time (hours)

68%

70%

KPLC Customer Satisfaction Index

2.0 4.0 6.0 8.0

62%

64%

66%

68%

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‐60%

62%

2007/08 2008/09 2009/10 2010/11

Major New Developments In the Electricity Sub‐Sector

Creation of Ketraco, REA and GDC

the Electricity Sub‐Sector

Energy Scale Up Program targeting 1million new households in the next 5 yrs at cost of KShs. 84 billion

Planned Regional Interconnection projects e.g. g p j gConnection to Southern Africa Power Pool, Ethiopia and 2nd Uganda line.

Public private partnership framework to facilitatePublic private partnership framework to facilitate procurement of new projects that augment capacity e.g. geothermal, thermal, wind

i h h d i iffGreen energy investments through Feed‐in‐Tariff

SWOT Analysis• Providing an essential service

Strengths

g• High demand • Ability to readily adapt to a changing and modernising

operating environment• Company presence in all counties p y p• Well trained and skilled manpower

Weaknesses

• Periodic inadequate bulk supply to fully meet electricity market demand

• Insufficient transmission and distribution network Weaknesses redundancy• Capacity to absorb all the loan capital financing available • High internal construction costs• Long term growth market due to current low level of market

Opportunities

g gpenetration

• New business ventures in Fibre Optic telecommunications and consulting

• Formation of Counties

Threats

• Adverse hydrological conditions • Limited affordability• Vandalism of transformers, electricity line cables and

accessories

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• Encroachment on electricity line wayleaves• Illegal electricity connections and theft of electricity• Limitations due to regulatory conditions.

Contribution to Vision 2030 Economic Plan

The Economic Pillar of the Vision 2030 Economic Plan envisages major infrastructural development to facilitate economic growth. The company’s contribution are in the following aspects:p y g p

Planning and implementation of distribution reinforcement and upgrade infrastructural projects

Procurement of electricity generation capacity

Participating in planning of transmission capacity expansion

i i h l i i bPromoting green energy in the electricity sub‐sector

Improving electricity supply quality and reliability

Maintaining a high pace of new customer connectivityMaintaining a high pace of new customer connectivity

Enhancing access to electricity

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Strategic Priorities Consistent with Vision 2030 Medium Term Planed u e a

To ensure that the KPLC 5 Year Corporate Strategic Plan will effectively contribute to the Vision 2030 Medium Term Plan and h f ili l i i d d h h f ll i i illthus facilitate electricity demand growth, the following actions will be taken:

Raising the efficiency and quality of existing electricity infrastructure through reinforcement and upgrade projects

Implementation of new infrastructure projects within specified time framestime frames

In addition to publicly tendered least cost core projects new electricity sources will include Public Private Partnerships and private investor projects under the Feed In Tariff Policy so as toprivate investor projects under the Feed In Tariff Policy so as to facilitate sufficient investment in electricity generation facilities.

Kenya Energy Expansion Project will be implemented targeting

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one million new households to be connected to the national grid over the 5 year plan period at a cost of approximately Kshs 84 billion.

Strategic Priorities Consistent with Vision 2030 Medium Term Plan contdMedium Term Plan contd.

Regional interconnection with Ethiopia as a major source of imported electricity to minimise future risk of generation capacity shortfall

Emphasis on green energy sources in the least cost powerEmphasis on green energy sources in the least cost power development plan, in particular geothermal and wind power sources.

Implementing electricity pricing strategies to ensure that new electrical infrastructure lowers the cost of doing business and increases competitiveness of the countryp y

In deploying new high quality infrastructure measures will be taken to conserve environment as a national asset.

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Key StatisticsKey Statistics

Installed capacity MW (March 2011) 1,576

Effective Generation Capacity MW (March 2011) 1,306

* ( h )System Peak Demand MW to date* (Jan 19th, 2011) 1,178Forecasted unconstrained demand MW 1,290Reserve Margin % (March 2011) * 1.23%Energy Purchased 2009/10 (GWh) 6,692Total Sales 2009/10 (GWh) 5,624Sales % of Energy Purchased 2009/10 84.0%Losses as % of Energy Purchased 2009/10 16.0%Transmission and Distribution Lines, Circuit Length in Kilometers (11kV to 220kV) 43,523Number of Customers (March 2011) 1,674,102Population Electricity Access 29%

N t R i i thi t 1 23% d t th id l f 15%

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Note: Reserve margin is very thin at 1.23% as compared to the ideal of 15%. About 112MW of demand is not being met due to insufficient generation capacity, currently occasioned by poor hydrology

Supply and Demand SituationSupply and Demand Situation

March

Supply and Demand SituationSupply and Demand Situation

Indicator 2007/08 2008/09 2009/10 March 2011

Peak Demand MW * 1,036 1,072 1,107 1,178I ll d C i MWInstalled Capacity MW ** 1,310 1,345 1,473 1,576Effective Capacity MW ** 1 267 1 280 1 416 1 306** 1,267 1,280 1,416 1,306

Reserve Capacity Margin % 12% 9% 15% 1.23%

Note: * Current peak demand is 1,178 MW recorded in January 2011. Peak demand is considered suppressed by about 112MW. **Includes 60MW of Emergency capacity in 2009/10.

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Demand and Generation Outlook

Peak demand, now 1,178MW in 2010/11 grew at an average of 5 1% over the past 5 years with the reserve generationof 5.1% over the past 5 years, with the reserve generation capacity margin progressively declining to 2.2% in 2009/10 and currently 1.23%, during drought, from 27% in 2003/04. This compares to a required standard of 15%This compares to a required standard of 15%.

Peak demand is projected to rise to 2,243MW by 2015/16, an annual average growth of 13%, consistent with Vision 2030 g g ,economic targets .

To meet projected demand, an additional 1,749MW of firm ti it ill b i t ll d b t 2011/12 dgeneration capacity will be installed between 2011/12 and

2015/16.

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New Generation Plants (5 year period)


Project Energy Source

Capacity (MW)

Expected Date

(5 year period)(5 year period)

Tana Redevelopment Hydro 20 Jan 2011

Olkaria well head Geothermal 70 Jun 2011Kipevu MSD Thermal 120 Jan 2011

Triumph Power Athi River Thermal 81 Apr 2012Gulf Power Athi River Thermal 84 Apr 2012Melec Powergen Thika Thermal 87 Jun 2012Sangoro Power Plant Hydro 21 Dec 2011Eburru Geothermal 2.2 Dec 2011Ngong Wind Phase II Wind 20.4 Dec 2011Aeolus Kinangop Wind 60 Jan 2012

Lake Turkana Wind Power Wind 300 Mar 2013Olkaria 1 Extension Geothermal 140 Dec2013Kindaruma Upgrade Hydro 32 Jun 2013



Project Energy SourceCapacity (MW) Expected Date

(5 year period)(5 year period)

Project Energy Source (MW) Expected Date

Athi River Mining Coal Coal 19.5 Dec 2013

Olkaria IV Geothermal 140 Dec 2013

Orpower Additional Geothermal 52 Dec 2013

Mombasa Coal Plant Coal 300 Dec 2014

Ethiopia Import Import 200 Dec 2014

Benefits of the Generation Plants

Ethiopia Import Import 200 Dec 2014TOTAL MEGAWATTS 1,749

Adequate energy capacity to meet increasing demandDiversified sources of energyEstablishment of sufficient reserve capacity to mitigate against

i t f d d d d leconomic costs of unserved energy demand and any revenue losses

Energy Purchase by SourceEnergy Purchase by Source

KenGen REP Thermal

0%

Power Purchased by Source as at 28th February 2011

KenGen Hydro 43%

IPP Thermal

Thermal9%

0% Aggreko4%

25%

KenGen Geothermal

OrPower 4‐Geothermal

KenGen is the largest electricity bulk supplier providing 66% of

14%5%

energy in 2010/11 to date. IPP’s supply 30%, Emergency electricity (Aggreko) 4% and imports less than 1%.

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Committed Transmission Projects(By KETRACO)


Transmission Line LengthEst Cost. (USD$mil.)

CommissioningDate

Reactive Compensation Phase 1 ‐1 Nairobi Transmission system * 17 2011

2Kilimambogo ‐ Thika ‐ Githambo ‐Kiganjo 132kV single circuit 135 10.8 2011

3 Mumias – Rangala 132kV singlecircuit 35 2.8 2011

4 Sangoro – Sondu 132kV 5 2 2011 Mombasa – Nairobi 400kV double5 Mombasa – Nairobi 400kV doublecircuit 450 135 2012

6Kenya (Lessos) – Uganda (Tororo)220kV double circuit 250 90 2013 Rabai Malindi Garsen Lamu7 Rabai – Malindi – Garsen – Lamu220kV single circuit 320 33.9 2012

8 Uprate Embakasi from 180MVA to270 MVA * 2.25 2011

9 Kindaruma ‐ Mwingi ‐ Garissa 250 40 2013

10 Eldoret ‐ Kitale 60 10 2013

11 Kisii ‐ Awendo 60 10 2013



Transmission Line Length Est Cost. (USD$mil )

CommissioningDate

(By KETRACO)(By KETRACO)

(USD$mil.) Date

12 Olkaria – Lessos ‐ Kisumu 300 60 2014

13 Olkaria ‐ Narok 68 10 5 201313 Olkaria ‐ Narok 68 10.5 2013

14 Sotik ‐ Bomet 33 6 2013

15 Lessos – Kabarnet and Nanyuki 144 26 2013‐ Nyahururu

16 Kyeni ‐ Ishiara 33 6.5 2013

17 Mwingi – Kitui – Wote – Sultan 153 20 2013Hamud

TOTAL 482.75

* Projects to be undertaken by KPLC

Electricity NetworkElectricity Network Existing & Proposed HV & MV NetworkExisting & Proposed HV & MV Network

Voltage (kV) Voltage (kV) Length Length (km)(km)

Projected Projected Lengths Lengths (km) 2016 (km) 2016

20102010

500 0 1,200

400 0 1,250

220 1 331 2 269

Proposed Ethiopia –Kenya Interconnector

220 1,331 2,269

132 2,211 3,119

66 655 1,311

33 13,812 20,177

11 25,514 40,365

Total 43,523 69,690Total 43,523 69,690

Proposed Nairobi –Arusha Interconnector

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Interconnector

DISTRIBUTION PLANSEnergy Sector Recovery Project

DISTRIBUTION PLANSEnergy Sector Recovery Project

On going establishment of new Substations and Upgrading to cater for load growth and improve supply reliability and quality.

Value KshMillion

IDA Financed Contract I ‐ Syokimau, Gigiri, Donholm, Airport, Muthurwa, Limuru Thika KikuyuNairobi North Sondu Cherangani Butere 11kV cables in

2,042.42Limuru, Thika, KikuyuNairobi North, Sondu, Cherangani, Butere, 11kV cables in the city centre – All ongoing most at commissioning stage.

AFD Financed Contract II: Tononoka, Utange, Shanzu, Bamburi, Makande, KPRL, Miritini, Kipevu, Voi, Msambweni, Galu, Diani, Likoni, Malindi, Athi

1,565.49KPRL, Miritini, Kipevu, Voi, Msambweni, Galu, Diani, Likoni, Malindi, AthiRiver, Ruaraka and Kitisuru – 12 commissioned, rest at Commissioning stage

Cathedral – Nairobi West 66kv Cable ‐ Commissioned 113.65EIB Financed: 1. Contract III ‐Kamburu, Kileleshwa, Kabete, Naivasha, Lanet, 1528.66Makutano, Lessos 32/33, Lessos 33/11 ‐ In progress2. Contract IV ‐Mt Kenya Radio Project – Commissioned 246.83. SCADA/EMS – Ongoing, to be commissioned later this year. 1791.96

NDF Financed: Contract V ‐ Karen, Nairobi South, Ngong road, Westlands –Commissioned

979.61

KPLC Financed: 1. Contract IIE Watamu, Kanamai, Mariakani – Commissioned 143.74

2 R d i f i i i l li h i f b 2 200

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2. Reconductoring of various critical lines to enhance capacity so far about 700Kms completed. Provision of counterpart funds for the IDA, AFD, EIB and NDF funded components as per credit agreement

2,200

Establishment of new Substations and Upgrading 2010/11 to 2013/14 Value Million Ksh

Additional IDA Credit for ESRPAdditional IDA Credit for ESRPEstablishment of new Substations and Upgrading 2010/11 to 2013/14 Value Million Ksh

1. Contract VI ‐ Lot 1; Ridgeways ( Kiambu Rd) , Saika ( Komorock) and Ruai – ongoing.

1,018.70

2 Contract VI ‐ Lot 2; Langata laving ton and Ngong Town – ongoing 985 252. Contract VI Lot 2; Langata, laving ton and Ngong Town ongoing. 985.25

3. Group Electrification Schemes: in Western, Mt. Kenya , Nairobi and Coast Regions.

2,210.00

4. Purchase of Prepaid energy meters, conductors and line 8674. Purchase of Prepaid energy meters, conductors and line Automation equipment (RMUS), Various supply contracts awarded, manufacturing in progress.

867

K El t i it E i P j t IDA Fi dK El t i it E i P j t IDA Fi dEstablishment of new Substations and Upgrading 2010/11 to 2015/16 Value

Ksh Million 1 Establish a total of 26 s bstations (Rironi Lo er Kabete Gith g ri Villa Franca 5 270

Kenya Electricity Expansion Project IDA FinancedKenya Electricity Expansion Project IDA Financed

1. Establish a total of 26 substations (Rironi, Lower Kabete, Githuguri, Villa Franca, Uplands, Ndenderu, Lukenya, Maseno, Kericho, Kabaraki, Kapsowar, Keroka, Kianjai, Ahero, Magumu, Chapseon, Elgon View, Kibos, Majengo, Gatudu, Ndarugu, Kangema, Tala, Waguru, Mishimoroni, and Jomvu) – tendering in

5,270

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progress.2. Construction and Reconductering of about 1400kms 66, 33 and 11kV lines 1,2753. Purchase of : Prepaid energy meters 680

Distribution Projects Being Implemented with Funding from KPLC Rights Issue

Distribution Projects Being Implemented with Funding from KPLC Rights Issue

Establishment of new Substations and Upgrading Value Million Ksh

1. Establish substations Likoni Road, City square, Eastleigh, Kasarani, 3,899

from KPLC Rights Issue from KPLC Rights Issue

y q gDagoretti, Embu East, Bahati and Turkwell and construct and reconductoring – Purchase of land and tendering in progress.

2. Reactive Power Compensation and Thika road Substation and 2,800control centre

3. Prepaid metering system 2,500KPLC Loss Reduction ProjectsKPLC Loss Reduction Projects

Establishment of new Substations and Upgrading Value Kshs mill1. Design, Supply and Construction of Mwariki new substation and lines, Naivasha new substation and lines, Matundura new substation and lines,

7,087

KPLC Loss Reduction Projects KPLC Loss Reduction Projects

Naivasha new substation and lines, Matundura new substation and lines, Malakisi new substation and lines, Mai Mahiu new substation and lines, Olkalou new substation and lines, Thika North substation and lines.2. Lanet‐ Suswa 2nd 33kV line in concrete poles

32

3. Muranga 7.5MVA 33/11Kv S/S, Ndaragu S/S resiting, New Kangema 33/11 Kv S/S, Kibos 7.5 MVA 33/11 S/S, Maseno 7.5 MVA 33/11 S/S, Mwea7.5 MVA 33/11 S/S, Bomet 7.5 MVA 33/11 S/S.

Distribution Strategic Initiatives Distribution Strategic Initiatives To address critical electricity supply quality challenges facing the company theTo address critical electricity supply quality challenges facing the company the following projects are being implemented:

Project Objective Implementation periodperiod

1. Under grounding of electricity lines

To reduce electricity line break downs in urban centres as well as to enhance public safety

2010/11 to 2013/14

2. Automation Extension of new technologies such as smart grid, so as to improve performance of the electricity network

2010/11 to 2013/14

3 A t h Installation of more efficient load switching 2010/11 to3. Auto changeovers Installation of more efficient load switching equipment

2010/11 to 2013/14

4. Dry Type Transformers

Change from oil type to dry type transformers that are less prone to vandalism

2010/11 to 2013/14Transformers transformers that are less prone to vandalism 0 3/ 4

5. Joint Venture Transformer Factory

Initiate manufacturing of transformers locally in a joint venture arrangement.

2010/11 to 2013/14

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Factory6. Reactive Power

Compensation

To improve voltages and harmonics through installation of capacitors and other equipment.

2010/11 to 2013/14

Customer Services Strategic InitiativesCustomer Services Strategic Initiatives

Effectively collect revenue while providing efficient and high quality customer handling services. KPLC has developed a core competence of consistently achieving over 98% revenue collection as percent of billing

Action Time Framei. Automatic Meter Reading (AMR) project Pilot 2008/9

Roll‐out 2009/10 to /2013/14

ii. Prepaid Meters Pilot Rollout project to retrofit 250,000 per year small to medium customers.

Pilot 2009/1050,000 per year small to medium customers.

Install 200,000 meters per year for new customers

Roll‐out 2010/11 to 2013/14

iii. Smart metering for 100,000 domestic and small commercial customer

Roll‐out 2010/11 to 2013/14

iv. Use feeder metering and transformer ring f i t id d it l i

Roll‐out 2009/10 to 2013/14

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fencing to guide and monitor loss campaigns 2013/14v. Improve supply to people settlements Roll‐out 2010/11 to

2013/14

Customer Service StandardsCustomer Service StandardsKPLC launched its Service Delivery Standards (STIMAFLOW) in April 2010. This

St d d TiActual Average

Ti

KPLC launched its Service Delivery Standards (STIMAFLOW) in April 2010. This sets standards that customers should expect. It covers the following issues:

Standard Time TimeDisconnection for Non PaymentReconnection time after payment Within 24 hours Within 1 dayAccount Closure and Deposit RefundDi ti t f t l Withi 24 h Withi 1 dDisconnection on request for account closure Within 24 hours Within 1 dayDeposit refund upon closure of account Within 14 Days Within 14 daysUnplanned Supply InterruptionSystem / Transformer malfunction Up to 8 hours

4 61 ho rsTrees falling on lines Up to 8 ho rs 4.61 hoursTrees falling on lines Up to 8 hoursFallen pole Up to 10 hoursCustomer QueriesQuery / complaint in writing Within 7 days 1 dayOther queries and complaints walk ins email phone Within 7 days 1 dayOther queries and complaints ‐ walk‐ins, email, phone Within 7 days 1 day

Approximate Connection Cost For Low Voltage RequirementsStandard Approximate Cost

Actual average cost

LV Connection for customers within 600 meters from transformer

35

LV Connection for customers within 600 meters from transformer single phase Ksh 35,000 Ksh 35,000LV Connection for customers within 600 meters from transformer three phase Ksh 45,000 Ksh 45,000

Customer Service Standards Continued Customer Service Standards Continued Average

Connection Time After Application For Supply

Standard Quotation Time

Standard Construction Time

Actual Quotation Time

Average actual construction time

Requiring a meter only 7 3 49.7% of all LV and q g y

7.4 days

MV applicants connected within 45 days

Requiring Low Voltage Extension Metered at 230V 14 14Requiring Medium Voltage Extension Metered at 400V 28 45

99% of all LV and MV applicants connected within 62 days

Metered at 400V 28 45

Requiring connection at high voltage Metered at 11kV, 33kV or 33kV 45 By agreement

Main Challenges Facing Delivery of Service Standards

Challenge Remedies being undertaken

1 Vandalism causing longer duration outages Stricter penalties for vandalism being sought1. Vandalism causing longer duration outages Stricter penalties for vandalism being sought

2. Lack of documentation from some new supply applicants due to wayleaves and internal wiring causing delays

Applicants encouraged to resolve their documentation issues before applying for new supply

36

3. New customers increasingly more dispersed causing longer travelling distances for maintenance teams

More company depots and commercial offices being opened in new areas

4. Local Authorities charging levies on power infrastructure Will be resolved in legislation to implement the new constitution

Accelerated customer connection – Umeme Pamoja ‐ for groups people

Service Delivery InnovationsAccelerated customer connection – Umeme Pamoja ‐ for groups, peoplesettlements and maximization of transformer usageNew customer connection financing in partnership with commercialbanks and KPLC Revolving Fund –StimaloanExpanded payment of electricity bills at Commercial Banks,Supermarkets, Post Offices, MPESA and ZAP countrywide – EasyPayElectricity bill balances, SMS alerts to customers for disconnections andh d l d E Billscheduled outages – E‐Bill

Efficient Lighting project entailing free distribution of 1.25 million bulbs toelectricity customers‐ Badilisha Bulb campaignPrepaid MetersPrepaid Meters

Pilot project for 25,000 customers completed in 2010Rollout project for 250,000 small to medium customers to commence in 2011

Automatic Meter Reading for over 4,200 large electricity customerscompleted

People Settlements Electrification project commenced in 2010

37

p p j

Branch network (62) now set up in line with the new county structure

Organisation Culture Change and RebrandingOrganisation Culture Change and Rebranding

The Company has embarked on an organisation culture change and corporate rebranding project to transform our organization culture and staff attitudes. This is intended to greatly enhance service delivery, corporate performance and imageand image.

Development of a new corporate brand will ensure that KPLC is perceived as responsive to its customers and stakeholders, and professional in its mandate.

A consortium comprising Ogilvy & Mather East Africa Ltd., McKinney Rogers Kenya Ltd., and SBO Research Kenya Ltd., was engaged to assist the Company to implement the project over a three‐year period starting from January 2010.

The project’s output include:

Th C ’ i i i i d l t t tThe Company’s new vision, mission and core values statements

A new corporate logo and visual identity

Staff performance related training

A new Executive Information System (Dashboard)A new Executive Information System (Dashboard)

The project is expected to lead to a Corporate Reputation Index above 85% from the current 76% and to significantly contribute to attaining a Customer Satisfaction Index target of 80% from the current 69%. These in turn boost market factors leading to higher sales and revenue.

Enhanced staff productivity is also expected to raise profitability.38

KPLC Diversification StrategyKPLC h di ifi d it b i f l i th t dKPLC has diversified its business as a way of leveraging the assets and resources and increasing shareholder value. Leveraging the SCADA infrastructure

KPLC has installed 1200 km of a 24 pair fibre optic cable on its transmission infrastructure. KPLC is utilizing 6 pairs for internal use and the remaining 18 pairs have been made available for lease to licensed telecommunication operatorslicensed telecommunication operators.Four companies have already signed lease agreements for dark fibre with KPLC and six other companies have expressed interest. I f ll i i li ill b b il i h fib iIn future all new transmission lines will be built with fibre optic cables.

Consulting BusinessKPLC has recently entered into international consulting in partnership with Manitoba Hydro International in order to apply its knowledge and experience more widelyCurrently KPLC has partnered with MHI to provide managerial services and key executive staff to the electricity companies in Liberia and Afghanistan.

Financial Plan

To meet sub‐sectoral operational improvement and system growth targets during the 5 Year Strategic Plan period while sustaining profitability.The following financial strategies are to be pursued:Operational efficiency improvement by keeping growth in T&D costs lower than growth in electricity revenue (non‐fuel) by an average of 7% (percentage points) annually. Revenue gains from new customer connections (approximately 5% on average of annual total revenue)System losses reduction to provide additional Kshs 800 million gross profit (at 2011 prices) for each one percentage point loss reductionFinancial gains from improvement in electricity supply quality entailing increased sales from reduced aggregate interruption timeGrowth in new revenue streams from diversified business, in particular, leasing of fibre optic telecommunications capacity

41

Minimising the End User Cost of Electricityg y

The end user average tariff is now Kshs 11.3 per kWh (US cents 14 /kWh) as at February 2011. The primary contributor to end user tariff increase above the basic tariff ofThe primary contributor to end user tariff increase above the basic tariff of Ksh 7.52 is fuel cost adjustment. This reached Kshs 3.59 (32% of end tariff), while foreign exchange adjustment contributed Ksh 0.20.Measures that will be implemented in the plan period to minimise electricity p p p ytariffs include:

Least Cost Generation and Transmission Expansion Planning and implementation to minimise the LRMC tariffPower system loss reduction Improving the country risk perception through Guarantees to IPPs Development of major transmission line projects using Government funding to avoid factoring these capital costs into the retail tariff Energy conservation by customers and Demand Side Management (DSM) programs to minimise billsP M k t St d b i d d t lt t t kPower Market Study by an independent consultant to make recommendations on appropriate changes to the current tariff regime with a view to minimising the tariff burden on customers 42

Conclusions

Momentum of improvement over past 5 years to be maintained Support from lenders already in place for network infrastructural investment programmeinfrastructural investment programmeFunding from World Bank for additional works under the ESRP and KEEP projectsDue to current low penetration electricity demand is in a longDue to current low penetration electricity demand is in a long term growth trajectorySales recovery in the short term will be due to improvement in economic indicatorseconomic indicators Favourable operating environment is expected from a vibrant domestic private sector Accelerated economic acti it is e pected from large scaleAccelerated economic activity is expected from large scale expansion of infrastructureThe Company will implement this 5 Year Plan with equal sensitivity to customer satisfaction indicators as it has for itssensitivity to customer satisfaction indicators as it has for its financial and operational indicators

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Th kTh kThank you Thank you

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presentation to stakeholders conference on kplc 5...

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