Environmental challenges facing KENGEN in the energy industry

Abstract

In Kenya, the drive to deregulate and liberalize the power generation market has led to attempts at more precise economic definitions of what constitutes a natural monopoly: taking cost as exogenous. KenGen is in direct competition with four Independent Power Producers who between them produce about 18 percent of the country’s electric power. The company utilises various sources to generate electricity ranging from hydro, geothermal, thermal and wind.The objective of this study was to determine the environmental challenges facing KenGen in the energy industry. This study adopted a case study since the unit of analysis was based on one organization. The research utilized primary data which was collected using in depth face to face interviews with the relevant top management. The study found out that the challenges brought about by the environmental changes has brought about stiff competition, especially competition for resources like human capital, funding from both the government and donors, the changes have resulted to loss of goodwill with the public because of the spiraling cost of electricity as they are not able to appreciate the challenges posed by the reduced water levels as a result of prolonged draught. The study further concludes that the challenges on human resource recruitment, training and development have affected the financial performance of the company due to reduced revenues as a result of reduced water levels and increased costs of operations in recruitment, training and development costs and there is inefficient use of information sources and poor communication link between policy planning and budgeting by discouraging communication between the different stakeholders and reorientation of communication and training involving a wide range of stakeholders working in partnership needs to continue on a long-term basis of energy production in the company. The study recommends that the company should conduct consumer awareness and education campaigns to enlighten them on the activities carried out by KenGen, the challenges that KenGen faces in its operations and in so doing enlighten the consumers on the similarities and differences between KenGen, KPLC, GDC and other players in the energy industry. The study also recommends that the company should also reach out to the relevant bodies such as government bodies and donors to emphasize on the relevance and the importance of supporting KenGen through adequate funding.