KPLC billing
- Thread starter Eng'iti
- Start date
Denis Young
Elder Lister
Quite pathetic. These are the consequences of the unequal IPP contracts.
upepo
Elder Lister
Wrong, They are simply giving consumers who earn in foreign currencies an opportunity to pay directly in their currency instead of first changing to local currency, which results in losses for consumers and the company. They are getting rid of the middleman (banks), who disappears with sizeable chunk of the money from the currency conversions.
Kasaman
Elder Lister
You think the consumers who earn in foreign currencies have a problem getting Kenya shillings to pay for power bills?
upepo
Elder Lister
Think about the cost of the process. The consumer converts dollars to Kenya shillings to pay for power, then the power company converts Kenya shillings to dollars to service debts. Those two conversions present exchange losses that could be avoided by the customer paying directly to Kenya power in dollars. Plus it saves the company the headache of looking for forex.
mzeiya
Elder Lister
Usually, but not always, the applicable rate (slightly lower than the published rate) applies and one gets their pay in KES.
Aviator
Elder Lister
I have always insisted that IpPs are an insignificant component in the bill. I swear they contribute less that 2% of your bill, yet they play an important part in stabilizing the supply network.
Let's start with the basics.
Hard currency- This is a currency that is not likely to depreciate suddenly or fluctuate in value. Nearly all companies would treasure to have hard currencies in their bank.
The struggle of looking for Forex is normally on the one trying to look for hard currencies in this case KPLC.
Trust me, there's no company that would forfeit paying for bills in Kenya shillings
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They are a significant component with their take or pay arrangement.
Denis Young
Elder Lister
You have to be joking. Look at how much they take away from my units.
Is that what you call negligible. 400 shillings. 40% of my bill?
IPPs biggest cost is in the token amount and not forex charge. Take or pay contracts.
Denis Young
Elder Lister
Can you elucidate further.
Cortedivoire
Elder Lister
If the shilling weakens to the dollar, unapata tokens kiasi
Kasaman
Elder Lister
Sasa hii yetu ata tafathali juala !
upepo
Elder Lister
You still do not understand the issue. Kenya power wants to allow firms that can pay in dollars to so. What are the benefits? There will be no exchange losses for both parties and Kenya Power will have its own forex reserves, without the need to rely on banks.
So, this is how it works currently. A firm that earns in dollars has to change its money to shillings, say at a rate of 100 shillings to the dollar. When the firm pays its bill to Kenya power in shillings, Kenya power has to convert the shillings back into dollars, say at a rate of 105 shillings to the dollar. That means Kenya power loses five shillings per dollar in the conversions. This loss would not occur if the firm paid directly to Kenya power in dollars.
Those firms that earn in dollars pay their employees in Kenya shillings. Ask yourself why they've never thought about paying the salaries in dollars to avoid exchange rate losses.
Another question. Have you ever discovered that if you have say US$100,000 in a fixed deposit account in Kenya the interest you will earn will be like 2% but if you convert the money to KShs and give it to the same bank the interest will be higher?
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