NAIROBI, KENYA, NOVEMBER 23 — Kenya Power has reported a 64.4 per cent drop in net profit for the year to September 30, blamed on increased transmission and distribution costs.
The power distribution company has posted a Ksh1.9 billion profit after tax, a slump from Ksh5.3 billion it posted in a similar period last year.
This is despite an increase in overall revenue which grew 4.3 per cent to Ksh125.9 billion from Ksh120.7 billion, buoyed by a growing customer base which equally reflects in electricity sales.
Electricity sales grew by 2.3 per cent from 8.3 billion units the previous year to 8.5 billion units in the period under review, due to an expanded customer base.
This combined with an improved average yield led to 3.8 per cent increase in sales revenue which closed at Ksh95.5 billion, up from Ksh91.9 billion the previous year.
Profit before tax decreased by 59.7 per cent to Ksh3.1 billion from Ksh7.7billion in the previous year.
“This was mainly attributable to increased transmission and distribution costs as a result of maintenance activities on the expanded network,” KPLC reported in its financial statement on Friday.
Transmission and distribution costs increased by Ksh4.6 billion (or 14.1 per cent) to Ksh39.6 billion from Ksh34.7 billion incurred the previous year.
According to the Nairobi Securities Exchange (NSE) listed firm, the rise came as a result of higher debtors’ provision, depreciation due to increased capital investment and the rising cost of doing business.
Kenya Electricity Generating Company (KenGen) has already penalised KPLC Ksh 1.0 billion for flouting the 40-day window credit terms.
During the period, power purchase costs, excluding fuel and foreign exchange costs increased by Ksh2.6 billion from Ksh50.2 billion the previous year to Ksh52.8 billion.
This is attributed to an increase in units purchased from geothermal sources in the year by 602GWh or 13.5 per cent to 5,053GWh from 4,451GWh the previous year.
“Fuel cost decreased by Ksh485 million (or 20 per cent) to Ksh23.6 billion from Ksh24.1 billion last year, due to improved energy mix following less utilization of expensive thermal plants during the year,” the firm reported.
Acting Managing Director and CEO Jared Othieno further said:”Provisions for bad debts in excess of 30 days increased substantially from Ksh747 million in 2017 to Ksh6 billion in 2018 due to a more prudent approach in anticipation of the new financial standards that require higher credit provisioning for credit losses.”
The firm had last month issued a profit warning pegged on a depressed economic environment in Kenya, last year’s poor hydrological conditions and the prolonged electioneering period in the country.
The company’s management says it is focusing on provision of quality power supply by strengthening its electricity network and streamlining internal processes to improve customer experience.
“In addition, we have embarked on implementation of the Company’s new corporate strategic plan which lays emphasis on improving employee’s productivity, providing adequate, quality and reliable power supply, improving service delivery and ensuring financial sustainability,” CEO Othieno said.
According to the CEO, the company strategy was formulated in cognisance of the dynamic business environment, technological advancements and anticipated policy changes in the energy sector
“I am confident that we have the right initiatives and strategies in place to enable us realise our business goals,” Othieno said, assuring investors and shareholders that the management has put in place proper measures to move the company to greater heights.
Meanwhile, Kenya is keen to increase private sectors’ contribution to the country’s energy sector and economic growth.
Speaking during the KPLC investor briefing, Energy PS Joseph Njoroge said: “The Energy bill is in the last stages of completion. It focuses on renewable energy as well as creating an enabling environment for private sector participation in energy growth and development.”
Kenya Power directors do not recommend payment of a dividend to shareholders for the period.