KRA to Auction Kenya Power’s Transformers Owing to Tax Delays

The Kenya Revenue Authority (KRA) has issued a gazette notice to auction Kenya Power’s transformers stored in the Customs Warehouse in 30 days if the firm does not clear accrued taxes and fees.

The move follows Kenya Power’s complacence in clearing taxes for the importation of the transformers and storage fees.

“Unless the under-mentioned goods are entered and removed from the Customs Warehouse within thirty (30) days from the date of this notice, they will be sold by public auction on August 12, 2021,” the KRA said in the Kenya Gazette last Friday.

The transformers were shipped into the country 7 years ago. It is not clear why the country’s monopolistic power distributor has not cleared the fees amidst high demand for electrical equipment as Kenya accelerates rural electrification.

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The gazette notice paints a grim picture of how Kenya Power is cash-constrained as the country suffers regular power failure due to insufficient electricity generation.

The company’s transmission network is dilapidated, a case which should expedite the clearance of the transformers from the Customs Warehouse to address the issue of power outages across the country.

The company’s biggest consumers of power have opted to use solar photovoltaic grid-tied systems to supply power while others have bought stand-by generators due to the outages.

In the coming years, Kenya Power needs to spend billions of shillings to upgrade electricity lines and transformers to keep up with the growing demand.

Over the course of 7 years, the firm has increased its network by 56,611 kilometers to 84,681 kilometers, and the customer base has jumped 3.3 times to 7.6 million.

Nevertheless, the company posted a pretax loss of Sh7.04 billion for its financial year to June 2020.

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Meanwhile, the transformer auction comes at a time when KRA is aggressively pursuing uncollected taxes and cracking down on wealthy tax evaders as part of its budget for the year starting July.

KRA is racing to bring more people into the tax brackets and curb tax cheating and evasion in the quest to meet targets in an economy where Covid-19 economic fallout has battered collections.