NAIROBI, KENYA, FEB 24 — Kenya Electricity Generating Company (KenGen) half year profit for the period ended December 31, dropped 10.9 per cent to Ksh4.1 billion, in the wake of a ravaging drought that affected hydro power generation in the country.
This is down from Ksh4.6 billion recorded in a similar period last year, the company’s unaudited results for the six months to December released late Friday shows.
Profit before tax fell from Ksh6.6 billion to Ksh6.1 billion, pegged on “increased depreciation and amortisation cost.”
Amortization is simply the paying off of debt with a fixed repayment schedule in regular installments over a period of time.
The company’s earnings from electricity sales and other income however rose to Ksh18.6 billion compared to Ksh17.7 billion in the previous period, which represented a growth of 4.9 per cent.
KenGen CEO Rebecca Miano attributed the performance to higher energy revenues from geothermal and increased steam revenue following the completion of the Olkaria -Suswa transmission line.
“Our electricity sales increased from Ksh14.7 billion to Ksh14.9 billion due to growth in revenues from geothermal generation,” Miano said.
She noted that the company has achieved the impressive results despite the severe drought that has affected its hydro generation.
The drought, which began last year has seen water levels at many of its hydros fall drastically and the company is likely to close the stations in the next few weeks if the trend continues.
“But the falling water levels at the dams will be of minimal effect as KenGen has taken measures to cushion power consumers against high cost of power and blackouts in the event of closure of its hydro power stations following prolonged drought,” the company said in a statement.
The Nairobi Securities Exchange listed firm is implementing an ambitious programme to scale up power generation from geothermal and wind sources, to offset any deficit that may result from the closure.
According to the half year financial results, KenGen’s steam revenue increased from Ksh2.5 billion to Ksh3.2 billion due to completion of new wellheads plants and improved power evacuation following completion of Olkaria-Suswa transmission line.
The company’s expenses increased to Ksh4.6 billion from Ksh4.4 billion, mainly due to costs associated with maintaining existing and new power plants.
“The completion of Olkaria –Suswa transmission line which helped improve dispatch of geothermal hence steam utilization also led to an increment of steam costs from Ksh1.2 billion to Ksh1.8 billion,” said Mrs. Miano.
Depreciation and amortisation expenses increased by 14.7 per cent to Ksh5.19 billion from Ksh 4.52 billion to due to capitalization of completed Wellheads and Wells towards the end of the last financial year.
Interest income increased to Ksh732 million from Ksh632 million in December 2016, which has been attributed to the investment of surplus funds earmarked for capital projects during the period.
Miano explained that interest expenses increased due to completion and capitalization of Wellheads which were commissioned during the period.
KenGen is currently constructing the 158MW Olkaria V power plant scheduled to be complete by 2019.
The Company has put in place measures to improve revenue while optimizing costs in the second half of the financial year, it said.
The power plant is part of the company’s ambitious green energy development agenda aimed at delivering 721MW of renewable energy by year 2020 at an investment close to KSh135 billion.
The project is funded by Japan International Co-operation Agency (JICA) and the Government of Kenya.
The company is also developing other green energy projects which will ensure Kenyans benefit directly from reliable, clean and affordable electricity.
“Our focus is on geothermal energy, which is an eco-friendly, renewable and reliable source that can reduce consumers’ utility costs by up to 50 per cent,” said Mrs. Miano.
The power projects which are at different stages of procurement are Olkaria I Unit 6, 70MW, Ngong Wind Phase III 10MW, Olkaria VI PPP 140MW, Olkaria I Rehabilitation 50MW, Olkaria I AU and IV topping plant 40MW, Modular wellheads 50MW, Meru Wind Farm 80MW among others.