On Wednesday, November 21, 2018, KenGen said it had charged Kenya Power Sh1 billion in penalties after the utility failed to pay electricity bills within the agreed 40-day window.
The State-owned generator said the charge was tied to late-payment interest on invoices and was reflected in its annual report for the financial year ended June 2018. KenGen said interest on overdue amounts begins to accrue after 40 days.
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 stayed outstanding for over a year.
KenGen said only Sh7.44 billion, or 34 per cent of the total debt, had not yet breached the payment terms agreed between the two State-owned companies.
The arrears matter is significant because Kenya Power is KenGen’s only off-taker, leaving the power producer exposed to delayed receipts that can disrupt cash flow. KenGen said the risk was one of the main business concerns linked to selling all its generated electricity to a single buyer.
The company said the penalty lifted its finance income 2.5 times to Sh3.34 billion. It also said it had put in place a debt management programme aimed at recovering overdue amounts more aggressively.
In its post-balance sheet disclosures, KenGen said it received Sh18.57 billion from Kenya Power after the books had closed, which reduced trade receivables to Sh3.31 billion.
KenGen also used the report to push for the Energy Bill to be enacted into law, saying the legislation would open the market to more players and give it more than one customer for bulk electricity sales. The company said that would allow it to sell to multiple buyers in both the wholesale and retail segments.
Kenya Power buys hydro, thermal, wind and geothermal electricity from KenGen and independent producers for resale to homes and businesses.
