An aerial view of KenGen’s 140 Mega Watt Olkaria IV Geothermal Power Plant, in Naivasha. [PHOTO: FILE/STANDARD]

Nairobi; Kenya: Electricity Generating Company (KenGen) posted a 3.3 per cent increase in pretax profit to Sh4.2 billion for its full year ended June 30, 2014. KenGen's pre-tax profit tax increased by 3.3 per cent from Sh4.03 billion to Sh 4.16 billion as a result of increased electricity revenue.

However, the firm's profit after tax dropped to Sh2.8 billion from Sh5.2 billion made in the previous period.

It attributes this fall in net earnings to a tax expense incurred in 2014 compared to tax credit in the previous year. The tax credit in 2013 arose from higher capital allowances enjoyed at 150 per cent for investments in power projects outside major cities.

KenGen's expenditure increased by 11 per cent from Sh10.6 billion in 2013 to Sh11.8 billion in 2014. "This is attributable to increased operational and maintenance costs due to the rising cost of spare parts, additional staff to support new plants and an increase in depreciation and insurance expenses due to new plants," said Albert Mugo, KenGen's managing director.

The firm's total revenue grew by 4.3 per cent from Sh17.7 billion in 2013 to Sh18.5 billion in 2014. The increase is attributable to improved electricity revenue from new capacity.

This performance occurred at a time when KenGen's generating capacity had increased by 7.7 per cent from 1,239 MW in 2013 to 1,335 MW in 2014. This follows the connection to the national grid of 70 MW, part of the Olkaria 280MW geothermal project and 25.6 MW from Wellhead units.

The company has set out to deliver 844 MW as part of the Government's goal to increase generation capacity by over 5,000 MW by 2017.

President Uhuru Kenyatta last week inaugurated the 140 MW Olkaria IV, which is part of the 280 MW geothermal project. The remaining 140MW will be commissioned by December 31, 2014.

The 20.4 MW Ngong wind project was completed in September 2014 while additional 50 MW from the Wellhead units are being installed and 25 MW will be completed in the current financial year. The full benefits of these plants will be realised in the 2014/2015 financial year.

During the year, KenGen drilled a 30MW well, the largest in Africa. Drilling continues in preparation for the 140MW Olkaria V, 70 MW Olkaria I unit 6 and 140MW Olkaria VI. In addition, the company is implementing the 100 MW Meru wind project.

The firm's asset base expanded over the period under consideration by 32.6 per cent from Sh188.7 billion to Sh250 Billion due to investment in new projects, namely Olkaria I & IV power plants, Geothermal Wellheads, drilling of wells, purchase of land for future projects in Olkaria and the Ngong Wind Project. The board has declared a final dividend of 40 cents per ordinary share.

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