Kenya Electricity Generating Company (KenGen) has imposed a Sh1 billion penalty on Kenya Power after the utility failed to settle debts within the 40-day payment window in the financial year ended June 2018.
The company disclosed the sanction in its annual report released on 21 November 2018, saying the charge arose from late-payment invoices. “Interest on late payments accrues after 40 days,” KenGen said.
By the end of June 2018, Kenya Power owed KenGen Sh21.88 billion. Of that amount, Sh13.71 billion had remained unpaid for more than 60 days, while another Sh694.63 million had been outstanding for over a year.
KenGen said only Sh7.44 billion, or 34 per cent of the total debt, was still within the agreed payment period between the two State-owned firms.
Kenya Power buys electricity from KenGen and independent producers, including hydro, thermal, wind and geothermal power, for resale to homes and businesses. KenGen then invoices the distributor monthly for the electricity supplied.
The generator said its dependence on a single off-taker remains a business risk because delayed payments can disrupt revenue flow. “This comes with the attendant risk of late or delayed payment for electricity sales which could have adverse effects on KenGen’s flow of revenue,” the company said.
The penalty lifted KenGen’s finance income 2.5 times to Sh3.34 billion. The firm also said it uses a debt management programme to improve collection of overdue amounts.
In post-balance sheet disclosures, KenGen said it received Sh18.57 billion from Kenya Power after closing its books, which reduced trade receivables to Sh3.31 billion.
KenGen further argued that the Energy Bill should be enacted into law to widen the number of customers it can sell to. “This will allow entry of more players in the wholesale and retail of electricity (business), thus giving KenGen an option to sell bulk energy to multiple customers,” it said.
