Kenya Power profit weighed down by bad debt provision, rising costs

Kenya Power’s half-year profit has dropped by 16 per cent, weighed down by high provision for bad debts, rising cost of electricity distribution and repayment of loans.

The firm reported Sh2.46 billion in pre-tax profit for the six months ending December 2018, against Sh2.93 billion made over a similar period in 2017 - despite its revenues from the sale of electricity going up by more than 21 per cent.

Electricity sales went up to Sh56.9 billion compared to Sh46.9 billion in 2017.

The company said the decline in profits was occasioned by increased spending on transmission of electricity to its over six million customers.

Transmission and distribution costs went up by a third, while finance costs rose by 23.5 per cent, eating into revenues.

During the period, Kenya Power made a Sh2.5 billion provision for bad debts, further eating into its earnings.

“In an effort to enhance power supply and connect more customers, the transmission and distribution costs increased by 37.3 per cent to Sh21.7 billion from Sh15.8 billion recorded during the period ended December 31, 2017,” stated the company in the financial results.

“Finance costs increased by 23.5 per cent to Sh4.02 billion from Sh3.25 billion incurred in the half-year period to December 31, 2017.”

Kenya Power is still reeling from the loss of most of its management team, who were arrested and charged with corruption.

The amount of money paid to thermal power generating companies fell by half during the six months to Sh6.9 billion compared to Sh12.3 billion the previous year. [Moses Omusolo]