This archive report was first published on 20 September 2019.
Kenya Power is bracing for a significant decline in net earnings, with a projected drop of at least 25% or Sh479 million for the financial year ended June 30, 2019. This marks the third consecutive year the firm has posted declining profits.
The power distributor reported a net profit of Sh1.9 billion in the last financial year, a 64% drop compared to the previous year. According to a regulatory statement released on September 20, 2019, the firm attributed the projected decline in profits to an increase in renewable energy costs.
Acting Managing Director Jared Othieno stated, “The drop in profits is attributable to, among others, an increase in non-fuel costs in line with the company’s long-term strategy of growing cheaper and cleaner renewable energy.”
Non-fuel costs largely entail the cash paid out in power purchasing agreements. In the year ended June 2018, Kenya Power paid out Sh64 billion to 17 power producers, a seven percent increase from the previous year. The Independent Power Producers (IPPs) include State-run KenGen, which received Sh37 billion in steam, capacity, and energy charges for the 2017/2018 financial year.
Others are OrPower 4 Inc (Sh11.4 billion), Iberafrica Power (Sh3.1 billion), Rabai Power (Sh2.9 billion), Thika Power (Sh2.3 billion), and Tsavo Power Company (Sh2.3 billion) among others.
Power consumption in the country has steadily shifted from hydro-electric sources, with geothermal energy now producing the bulk of Kenya’s electricity demands. In the last financial year, 52% of power purchased by Kenya Power was derived from geothermal sources, with hydroelectric sources accounting for 30%.
