Kenya Power records Sh3.2 bn net loss in latest audit report

Kenya Power technicians at work. [File, Standard]

Kenya Power has recorded a Sh3.2 billion net loss, in the year ending June 2023. This is a plunge, compared to the previous year’s 3.2 billion net profit.

The results are as per an audit report for the year ending June 30, 2023, released by Kenya Power’s Board of Directors.

In a statement shared by the lighting company on Thursday evening, the loss has been attributed to high finance costs as a result of the fluctuations in the exchange rate between the dollar and the shilling.

“In the period, the Kenya Shilling depreciated by 19% from KShs.118 per USD in June 2022 to KShs.140 per USD in June 2023. The impact of the currency fluctuation as reflected in the finance costs and cost of power purchase eroded the operational gains recorded during the year, resulting in a net loss of KShs. 3.2 billion,” the statement reads in part.

According to Kenya Power, the depreciation of the Kenya shilling against major international currencies led to an increase in finance costs by 89 per cent. It went from Sh12.76 billion to Sh24.15 billion.

“To mitigate the impact of forex exposure on operational performance, the Company is working on restructuring its loan book to minimise the loan obligation that is dollar-denominated. Part of this process involves the transfer of some transmission assets to the Kenya Electricity Transmission Company (KETRACO) to offset the government on-lent loans,” the company has pledged.

 According to Kenya Power's Managing Director and CEO Dr. (Eng.) Joseph Siror, the Company is working on ways of increasing electricity demand, by tapping into new business areas.

"In this regard, the Company is implementing strategic initiatives to drive the adoption of electric motorisation. The gains from these initiatives will complement other revenue growth and diversification strategies already in place, including implementing the Time-of-Use tariff to encourage energy consumption during off-peak periods and the fibre leasing business," said Dr. (Eng.) Siror.

"The overall fundamentals remained stable despite the challenging macroeconomic environment that was characterised by a depreciating shilling and an increase in the overall cost of doing business," he adds.

Kenya Power also recorded a growth in operating profit from Sh17.1 billion posted during the previous year to Sh19.2 billion.

Revenue from electricity sales also went up from Sh157.3 billion to Sh190.9 billion, mainly supported by an expanding customer base.

Additionally, unit sales also increased by about 400 GWh, mainly due to the expansion in consumption within the commercial and industrial customer segments.

In the period under review, Kenya Power audit shows that operating expenses reduced from Sh36.9 billion to Sh34.9 billion, owing to deliberate efforts by the company to minimise costs as part of its strategic initiatives to accelerate performance.

Power purchase costs also went up by 22 per cent during the year, to Sh143.5 billion. This has been attributed to a rise in units purchased to meet the rising electricity demand.

In line with this increment, the unrealised foreign exchange losses on power purchases increased to Sh5.3 billion because of the depreciation of the Kenya Shilling against the US Dollar and Euro, the currencies in which most of the power purchase agreements are denominated.