Kenya Power posts Sh7.4b profit as revenues dip

Kenya Power Managing Director Ben Chumo

A sharp drop in consumption of costly diesel-generated electricity has depressed Kenya Power’s revenues in its financial year to June, resulting in a slower 6 per cent rise in net profits to Sh7.4 billion.

Fuel cost adjustments, which make up a significant portion of power bills, fell by nearly Sh13 billion after the commissioning of 225 megawatt plants and retiring of several diesel-powered projects.

Kenya Power recovers fuel-related costs from customers and passes these on to power generators.

“The increased contribution of geothermal has significantly changed the monthly energy mix by displacing expensive thermal energy, thus relieving pressure on hydropower to become the leading source of energy,” Managing Director Ben Chumo said in a commentary.

Cheaper energy

It is the first time that more power has been generated from geothermal wells than from hydro sources, both being cheaper energy sources than thermal plants, which use fossil fuels.

Already, households are feeling the relief of declining power bills as the country slashes the consumption of expensive electricity generated from thermal plants.

But that relief means lower collections for Kenya Power. While electricity sales rose by a quarter to Sh77 billion, the increase was wiped out by a sharp drop in recoveries from fuel cost adjustments, leaving total revenues nearly flat from the previous year at Sh106 billion.

The firm said power generation from thermal plants decreased 34.8 per cent from 2,725 gigawatt-hours (GWh) the previous year to 1,778 GWh.

Kenya Power has now announced a Sh0.30 final dividend, taking the total payout for the year to shareholders to Sh0.50 per share.

The firm has also invited shareholders to an annual general meeting on December 22, with the agenda including the incorporation of a fully-owned subsidiary to run an up-graded specialty technical training school. Kenya Power already owns a technical training institute, but it is managed as a department within the firm, rather than as a subsidiary.

Dr Chumo’s focus this year is on investments in distribution networks to reduce outages, and connecting commercial customers to boost sales.