Kenya Power reports worst performance in 16 years, net profit drops to 91.98 percent

Kenya Power has reported the worst performance in 16 years which makes the firm's net profit declines to 91.98 percent. The profit drops to Sh262 million from Sh3.27 billion for the financial year ended in June 2019 at the high cost of buying electricity. Finance costs also went up 46.4 percent to Sh10.3 billion due to higher short-term borrowings, the company said.

Despite revenue rising by 1.34 percent to Sh133.1 billion on more electricity sales, increased power purchase and higher finance costs depressed its bottom-line.

"This was mainly ascribable to an increase in non-fuel power purchase costs by Sh18 billion from Sh52.7 billion to Sh70.8 billion following the commissioning of two power plants with a combined generation capacity of 360MW during the period," according to Kenya Power."In addition, finance costs rose by Sh3.2 billion due to increased levels of short term borrowings and foreign exchange losses.

"Power purchase costs, including fuel and foreign exchange costs, increased by Sh6 billion to Sh90.1 billion. Finance costs rose by Sh3.2 billion or 46.35 percent to Sh10.3 billion partly due to increased use of short term loans electricity distributor announced the results Wednesday which saw its full-year performance 2018 restated. The results follow a string of profit warnings last year by the company. The cost of buying electricity from power generators like KenGen jumped by Sh18 billion during the period, Kenya Power said, blunting the impact of an increase in sales to customers.

Kenya Power has made an application to the regulator for an increase in electricity prices by up to a fifth, saying it is key in reversing its reducing profitability which has seen its earnings drop for three years in a row.