Kenya Power has reported a net profit before tax of Shs.5.659 Billion in the half year trading period ended 31 December 2021, compared to Shs.332 Million realised in a similar period last year. This growth is mainly attributable to an increase in sales, enhanced system efficiency, and lower operating costs.
Electricity sales recorded a 366GWh increase to 4,562GWh, an 8.7% growth compared to a similar period last year. This was driven by an increase in customer connectivity, as well as improved supply quality and reliability due to enhanced preventive maintenance works, network refurbishment, and accelerated faulty meter replacements.
This, combined with a 2.33% improvement in system efficiency which stood at 77.13% as at 31st December 2021, led to a 12.9% increase in electricity revenue which grew to Shs.69.447 Billion.
Operating costs decreased from Shs.20.132 Billion to Shs.19.036 Billion as a result of enhanced cost management and resource optimization initiatives that the Company is implementing as part of its turn-around strategy.
Non-fuel power purchase costs increased from Shs.38.123 Billion incurred in the previous period to Shs 40.487 Billion mainly due to additional unit purchases to support increased demand. Similarly, fuel costs increased from Shs.4.618 Billion to Shs.10.871 Billion mainly due to a 314 GWh increase in units purchased from thermal plants to 709 GWh due to low hydrology resulting from delayed rains, and an upsurge in fuel prices.
Finance costs increased to Shs.6.777 Billion from Shs.6.601 Billion the previous period mainly due to a rise in unrealised foreign exchange loss resulting from the depreciation of the Kenya shilling against major currencies.
Overdue customer debt, for the first time in five years, recorded a reduction of Shs.900 million as a result of enhanced field presence, continued government intervention with state agencies, and increased customer engagements. In the second half of the year, the business will primarily focus on domestic and SME customers who currently account for 67% of the Company’s outstanding debt.
Kenya Power continues to roll out a proactive strategy to enhance its cash position which is premised on the prioritization of payments of outstanding obligations. As a consequence, the Company reduced trade and other payables by over Shs.4 Billion. In addition, the business cleared overdrafts amounting to Shs.3.595 Billion.
Further to this, the Company closed the first half of the financial year with a cash position of Shs.8.347 Billion which includes ring-fenced funds projects, receipts from Government for the Last Mile, and street lighting programmes, as well as funds for scheduled loan repayments.
Building on the momentum
As Kenya Power marks a century of service to Kenyans, the Company is using this opportunity to take stock of the state of its business which is operating in a highly dynamic and complex environment, whilst laying the foundation for its future.
As a consequence, the business is at the height of concerted reforms aimed at enhancing its ability to deliver on its core mandate, by making it more efficient, agile and customer led. It is envisioned that these reforms will buttress the business and guarantee its sustainability.
To build on the gains made on the turn-around strategy, which was launched in the last financial year, the business will in the second half, escalate initiatives aimed at growing sales, revenue collection, enhancing system efficiency, manage costs and importantly, improve customer experience.
In particular, Kenya Power is focusing on reducing billing complaints by improving the entire billing value chain. This is in addition to improving employee accountability and productivity. Similarly, the utility will continue to make investments in the network so as to increase its reliability, and continuously improve its connectivity process in order to onboard more customers to the grid.
These internal initiatives are being complemented by on-going sector reforms which will create synergies within the energy value chain to enable this critical sector to effectively deliver on its mandate of providing affordable, clean, reliable, and sustainable power to Kenyan homes and businesses to support social and economic growth.