NAIROBI, KENYA, NOVEMBER 19 — Kenya’s electricity generator- Kenya Electricity Generating Company (KenGen) has recorded a 12.4 per cent drop on its profit for the financial year ended June 30, weighed down by increased expenses amid a drought that hit the country.
The Nairobi Securities Exchange (NSE) listed company closed the year with a Ksh7.89 billion profit, down from Ksh9.01 billion recorded last year.
According to the firm, the prior year’s tax expense was lower “largely due to the effect of tax incentive (investment deduction) granted on commissioning of the new geothermal wellhead plants.”
The profit drop came despite the firm’s revenues edging up 4.4 per cent to close at Ksh45.3 billion up from Ksh43.4 billion last year.
Fuel and water expenses however increased by 5.6 per cent to 9.4 billion from Ksh8.9 billion. Revenues less reimbursable (fuel and water) closed at Ksh35.9 billion, up from Ksh34.4 billion.
During the year, the leading power generator recorded increased costs on steam which went up to Ksh3.5 billion from Ksh2.8 billion. Steam revenues however soared to Ksh6.2 billion.
Operating profit dropped to Ksh11.4 billion from Ksh13.5 billion with the firm’s total comprehensive income closing at a lower Ksh7.27 billion compared to Ksh8.48 billion last year.
During the period under review,KenGen’s energy sales increased by 6.0 per cent from 7,556 GWh in 2017 to 7,989 GWh, despite a persistent drought which affected water levels in its reservoirs in the first three quarters of the year.
Heavy rains experienced in the last quarter of the year led to increased water inflows in its hydro dams with Masinga dam peaking at 1,057.75 meters above sea level, the highest in 20 years.
“KenGen continued to demonstrate resilience despite a challenging operating environment, pointing to the fact that our strategic execution is strong enough to grow the business going forward. In the period under review, we maintained a good performance which enabled us to provide reliable, safe, quality and competitively priced electricity in line with our mandate,” the firm said in a statement.
Geothermal guaranteed a dependable energy supply given the electricity revenue’s increase to Kshs17.1 billion.
In their next business year, KenGen has set a delivery target of 165.4 MW from their already advanced geothermal project.
“We are committed to maintaining investor and shareholder confidence in our business growth through capital-intensive investments in power generation projects. As is evident in our results, we continue to register positive operating cash results despite large investments in capacity expansion that is focused on geothermal,” the firm noted.
“It is through such investments targeting supply of the country’s base load requirements that are focused on reinforcing the foundation for future steady revenues and earnings to shareholders,” the management aid.
The firm targets to deliver the 165.4 MW Olkaria V geothermal project by next year.
The implementation of 83.3 MW Olkaria I Unit 6 geothermal project has also commenced with planned commissioning in early 2021.
The balance of the project pipeline drawn from wind, solar and geothermal sources for a total 476 5 MW are at various stages of preparation for implementation in line with the country’s updated Least Cost Power Development Plan (2017-2037).