Kenya Power announced its first profit of Ksh 30 billion in six years.  The company’s ability to turn a profit in its financial statements this year from a loss of Ksh 3.19 billion last year has raised eyebrows, but there have been some headwinds blowing in its favour to support this turn of events.

The dramatic turn has been supported by a number of initiatives aimed at boosting efficiency and reducing revenue leakage. By adopting cost-reflective tariffs and enhancing digital self-service platforms, Kenya Power has improved its revenue collection while reducing the inflated costs associated with physical banking hall operations. Digital service platforms like the MyPower app and the USSD service (*977#) saw significant user adoption, reducing foot traffic in banking halls by 75%. 

Kenya Power’s investments in renewable energy and the associated transmission infrastructure have also contributed to its recovery, with over 90% of the current energy mix sourced from green energy during favourable hydrological conditions. The restructured cost-reflective tariffs have brought about talk that the company raised tariffs to turn a profit, but this is not wholly true. The interesting push to profitability comes from higher demand driven by Electric Vehicles (EVs). The emerging electric vehicle market, though still in its infancy, contributed 1.2 GWh to Kenya Power’s overall sales, representing an exciting avenue for future expansion. 

Addressing issues such as electricity theft and vandalism of energy infrastructure, which drove up maintenance costs while also contributing to revenue leakage, has also been a contributing factor. The theft of copper cables, in particular, became a significant issue, with the company advocating for stricter controls on copper trading to deter vandals. This is despite the passing of regulations like the Energy (Net-Metering) Regulations, 2024 (the Net-Metering Regulations), which now allow consumers who are also electricity producers to sell surplus power back to the grid during times of overproduction. 

This setup allows producers to offset the cost of the electricity they draw from the grid, reducing their overall energy expenses. The Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024, also opened up the market to end the Kenya Power and Kenya Electricity Transmission Company Limited (KETRACO) monopoly in the transmission and distribution of energy. Independent Power Producers (IPPs) can access these aspects of the energy market that were closed to them before. 

Kenya Power is also not resting on its laurels with this happy turn of events but is looking to advance a series of initiatives to sustain growth and optimise its financial position. These include developing a forex mitigation strategy under International Financial Reporting Standards (IFRS) to address the challenges of foreign currency fluctuations, leveraging green financing options, and restructuring debt to limit foreign exposure. The company is also exploring further local currency funding options to reduce reliance on volatile foreign loans. It has also launched the Kenya Power Foundation and an upcoming sustainability strategy to drive social and environmental impact initiatives that align with global sustainability trends.