Payment of old electricity bills to KenGen dents Kenya Power profits

The Kenya Power head office at Electricity House in Nairobi.

A Sh18 billion payment of old debts owed to Kenya Electricity Generating Company (KenGen) may resulted in Kenya Power’s profits going down by more than 25 per cent in the year to June 2018.

The power distributor has in the past failed to pay KenGen for some of the electricity supplied for onward resale to consumers, which had led to KenGen classifying some of the debts as doubtful.

At some point, the Ministry of Energy intervened in the matter to play peacemaker between the two critical power sector players.

Kenya Power has now paid a substantial chunk of the debt.

In a statement, KenGen yesterday said it had over the recent months received Sh18.6 billion of the Sh21.8 billion owed by Kenya Power. The amount is substantial considering that KenGen’s revenues stood at Sh45.3 billion during the year to June 30.

Earlier in the week, Kenya Power issued a profit warning but made no reference to the payment to KenGen. It said the dip in profits was due to a slow business environment, increased financing costs and delay in review of electricity tariffs.

The money was however not factored in KenGen’s financial results for the period to June 2018 as it came in after the end of the financial year.

“We are glad to report that, trough trade receivables from Kenya Power stood at Sh21.8 billion as at June 30, at the time of releasing the results (post balance sheet), Sh18.6 billion had been received and thereby reducing the trade receivables to Sh3.3 billion,” said the power producer when it published its results for the financial year.

Credit window

Kenya Power usually has a credit window of slightly over a month to pay power producers for the electricity supplied.

“They are supposed to pay us after 40 days…there has been a backlog and (part of) that is what was being cleared,” said KenGen Chief Executive Rebecca Miano at a briefing yesterday.

In the year to June, KenGen’s profit after tax dipped 12 per cent to Sh7.89 billion from Sh9 billion the previous year.  

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