Kenya Power bounces back to 1.5 billion shillings in profit

Kenya Power returned to profitability until June 2021 thanks to revenue growth. This is attributed to a huge demand for electricity and reduced costs.

The company reported net profit of Sh1.49 billion for the year, an improvement from a loss of Sh939 million recorded in the same period last year.

The firm attributed the profit on Friday to demand for electricity defying the impact of Covid-19.

The pandemic saw a drop in energy use in the first few months, but appears to have recovered and even exceeded pre-pandemic levels.

Revenues reached 144 billion shillings in June 2021, up from 133 billion shillings in June 2020. The utility company said it had also reduced the cost of servicing loans by renegotiating the terms of some of its short-term borrowings and the extension of the mandate.

This brought financial costs down to Sh 9 billion from Sh 12.4 billion the previous year.

“The positive growth is attributable to an 8.4% increase in electricity revenues (excluding foreign exchange surcharge and fuel recovery) resulting from growth in electricity sales… and lower operating costs. In addition, the financial costs were reduced by 3.4 billion shillings. »Said the electricity distributor.

“Reduced financial costs as a result of partial overdraft conversion and continued repayment of commercial loans. In addition, unrealized foreign exchange losses have been reduced due to careful planning of foreign exchange transactions. ”

The company noted that its operating expenses were reduced by 17 percent from Sh47.83 billion to Sh39.86 billion. This is due to lower provisions due to improved revenue collection, prudent cost management and value for money initiatives implemented during the year. 25.2 percent.

The company attributed the reduction in system losses to improved meter readings, including replacing faulty meters, reducing electricity theft resulting from meter bypass and illegal connections.

Despite the improvement, however, the company has yet to reach the 19.9% ​​recommended by the Energy and Petroleum Regulatory Authority.

The government has decided to reform Kenya Power and the electricity sector, with the aim of reducing the cost of electricity by 33% by December. Recommendations include renegotiating power purchase contracts with independent power producers.

The state has started to implement some of the recommendations and recently declared Kenya Power a special government project. The president also carried out a mini cabinet reshuffle which saw Monica Juma appointed secretary of the energy cabinet with Gordon Kihalangwa as principal secretary.