Gov’t tax relief cuts Kenya Power full year loss to Ksh.939M
Published on: February 26, 2021 04:20 (EAT)
Kenya Power full year loss contracted from an initial Ksh.2.98 billion to Ksh.939 million from tax credits earned from the relief on corporation tax passed on to firms last year. The new loss position is according to new disclosures by the utility company contained in the firm’s audited financial results for the period ending in June 2020. While Kenya Power’s pre-tax loss stood at a high of Ksh.7 billion but the firm earned Ksh.6.1 billion in tax credits following the reduction of the corporate tax rate to 25 per cent from 30 per cent in April last year. The company however remained in loss territory at the end of the period from a profit of Ksh.262 million in June 2019. This was in spite of revenues from customer remaining steady at Ksh.133.3 billion from Ksh.133.2 billion across the 2018-19 period. Kenya Power Achilles heel represented by higher costs nevertheless continued to weigh down returns for the firm with both transmission and financing costs picking up in the period. Transmission costs for instance increased to Ksh.47.8 billion from Ksh.41 billion last year mainly due to an increase in provisions for trade and other receivables. “The board approved the change in accounting estimation for slow moving and obsolete stock, taking a more prudent view which resulted in increased impairment for inventories,” Kenya Power said in the disclosures published on Friday. Meanwhile, finance costs increased by 21 per cent in the period to Ksh.12.5 billion on the back of unrealized foreign exchange losses from the depreciation of the shilling last year. The rise in the costs offset a decline in the company’s fuel costs which fell by 39.5 per cent to Ksh.11.1 billion. The bloated cost of financing have continued to haunt the company with its half year profit for the period ending in December 31, 2021 falling by 80.1 per cent to Ksh.138 million. Financing costs in the period more than doubled to Ksh.8.1 billion from Ksh.3.8 billion in December 2019. Kenya Power had delayed releasing the full year results to June 2020 pending the appointment of a new Auditor General who cross-checks the company’s books.