How to Improve Utility Performance: Understanding Structural, Governance and Regulatory Incentives in Kenya Power and Kenya

The power sectors in most African countries face an enduring problem of poor utility performance. Empirical findings show that the structural, governance, and regulatory reforms that previously created incentives for improved utility performance are increasingly threatened by political influence. Kenya Power’s financial viability has deteriorated in recent years and the regulator has been undermined. One of my major conclusions is that when the relationship between the government and utility is well understood and the agent is properly incentivized, performance improvements are possible. However, when the principal undermines or muddies those incentives through conflicting political interventions, performance improvements can be reversed.