Kenya Power half-year profit sinks by 80% on bloated financing costs

Utility Company Kenya Power has seen its half year earnings across six months to December 31, 2020 slump by 80.1 per cent to Ksh.138 million from Ksh.692 million in 2019.

The astronomical earnings wipe out is attributable to the company’s runaway financing costs which raced to Ksh.8.1 billion in the period to nearly double from Ksh.3.8 billion at the same stage a year earlier.

Kenya Power’s non-fuel power purchases increased by over Ksh.1 billion in the period to Ksh.38.1 billion from foreign exchange losses on foreign currency denominated power buys.

“Finance costs increased due to the depreciation of the Kenya shilling against major trading currencies leading to an unrealized foreign exchange loss,” Kenya Power said in disclosures on Thursday.

Fuel cost charges nevertheless fell to Ksh.4.6 billion from Ksh.7.2 billion attributable to less thermal generation.

Transmission and distribution costs were also down at Ksh.18.7 billion from a higher Ksh.23 billion in 2019.

Revenues from electricity sales to customers meanwhile remain relatively unchanged falling by just one per cent to Ksh.69 billion.

Subsequent to the profit decline, Kenya Power’s earnings per share have fallen to just seven cents from a higher 35 cents.

Kenya Power jumped into its first loss in nearly two decades as it booked a Ksh.2.98 billion loss in the year ended in June 2020 according to disclosures by the National Treasury.

The company had delayed the publication of its financial results following a delay in the appointment of the Auditor General.

The utility firm costs base continues to be an Achilles heel to its performance in spite of growth in the number of Kenyans connected to the grid.