Sh479 million profit drop dims Kenya Power earnings

Kenya Power is staring at a drop in net earnings of at least 25 per cent or Sh479 million for the financial year ended June 30, 2019.

This marks the third consecutive year the firm is posting declining profits. In the last financial year, the power distributor reported a net profit of Sh1.9 billion, which was a 64 per cent drop compared to the previous year.

In a regulatory statement released yesterday, the power utility firm attributed the projected decline in profits to increase in renewable energy costs.

“The drop in profits is attributable to, among others, an increase in non-fuel costs in line with the company’s long term strategy of growing cheaper and cleaner renewable energy,” said the firm’s acting Managing Director Jared Othieno in a statement yesterday.

Non-fuel costs largely entail the cash paid out in power purchasing agreements.

In the year ended June 2018, Kenya Power paid out Sh64 billion to the 17 power producers, a seven per cent increase from the previous year.

The IPPs include State-run KenGen that received Sh37 billion in steam, capacity and energy charges for the 2017/2018 financial year.

Others are OrPower 4 Inc (Sh11.4 billion), Iberafrica Power (Sh3.1 billion), Rabai Power (Sh2.9 billion), Thika Power (Sh2.3 billion) and Tsavo Power Company (Sh2.3 billion) among others.

“The growth in renewable energy is aimed at enhancing the company’s sustainability and making power affordable to all whilst reducing dependency on thermal generation,” stated the company in part.

Power consumption in the country has steadily shifted from hydro-electric sources with geothermal energy now producing the bulk of Kenya’s electricity demands.

In the last financial year, 52 per cent of power purchased by Kenya Power was derived from geothermal sources, with hydroelectric sources accounting for 30 per cent.

However, the firm still relies on electricity from the more costly thermal power plants.