Weak shilling, Uhuru subsidy put Kenya Power in Sh1.1 billion loss
Electricity distributor Kenya Power is attributing the Kes1.1 billion loss suffered in the six months ended December 31 to ballooning foreign exchange losses and the government’s move to roll out 15 percent cut in consumer tariff.
Kenya Power saw electricity revenue for the period drop by Kes6.7 billion at a time when the utility experienced a 4.4 percent jump in electricity sales to 4,764GWh compared to a similar period previously.
In January 2022, Kenya Power cut retail tariffs by 15 percent a drop that cost roughly Kes26 billion and was premised on the utility edging out system losses, the percentage of electricity bought from generators such as KenGen but does not reach destinations such as homes and businesses, due to power theft and system losses.
The State promised a similar cut from April 1 last year based on the review of Power Purchase Agreements after a task force appointed by former President Uhuru Kenyatta cited huge disparities between the tariffs charged by main power producer KenGen and the Independent Power Producers. The second tariff cut was, however, never effected.
In the period under review, the company saw finance costs increase to Kes21.7 billion up from Kes19 billion on account of increased forex losses “arising from revaluation of outstanding payments to power generators denominated in foreign currencies as a result of depreciation of the Kenya Shilling.”
To guard against similar hit in successive years, the company said it will start allowing a section of its clients whose income is in foreign currency to start settling their bills in those currencies.
In the half, the company also saw finance costs edge up to Kes7.4 billion from Kes6.8 billion due to uptick in unrealized forex losses arising from the firm’s bulk of foreign denominated loans.
