Consumers with foreign currency earnings can now choose to pay their electricity bills in US dollars, euros, or pounds sterling, offering a sigh of relief to Kenya Power which has been grappling with significant foreign exchange losses.

The utility company announced on Friday that it is setting up dedicated accounts to collect payments in these foreign currencies from customers who are "willing and able" to do so.

This move comes after receiving the necessary approvals from the government and relevant authorities.

"We are in the process of opening collection accounts in a manner that is well interfaced with our systems," said Kenya Power Finance Manager Stephen Vikiru, highlighting the streamlined approach to integrating the new payment option.

The decision follows Kenya Power's recent financial turnaround, with a jump in revenues and a return to profitability in the first half of 2023.

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However, foreign exchange losses continued to be a major challenge, doubling in the same period due to the weakening Kenyan shilling.

This is precisely why Kenya Power has long sought permission to accept foreign currency payments, particularly from customers who earn in dollars or euros.

Initially, concerns were raised about the legality of this approach, given the existing forex compensation mechanism built into electricity bills.

However, Kenya Power has clarified that the new system will be entirely voluntary, with exchange rates negotiated on a per-billing basis.

Vikiru further explained how companies like flower exporters, who earn primarily in foreign currency, currently face the inconvenience of converting their earnings to shillings before paying their electricity bills.

"These companies already have the dollars or euros, and we actually need those currencies," Vikiru said, emphasizing the mutual benefit for both parties involved.

Kenya Power's need for foreign currency is substantial, requiring around $46 million and €18 million every month to cover power purchases and loan repayments.

Shortages of foreign exchange have previously led to difficulties in settling bills with power suppliers and accumulating debts.

The company hopes that the recent strengthening of the shilling and the new billing option will alleviate some of the pressure related to foreign exchange.

Additionally, Kenya Power is exploring further solutions like restructuring its balance sheet and reviewing its forex mitigation strategies to achieve long-term financial stability.