POWER LOSS

Kenya Power seeks debt moratorium, plans recovery

Investors walked way empty handed from the AGM on zero mention of dividend.

In Summary
  • It has also sought services of debt collectors to claim billions of shillings in pending bills.
  • According to the firm's audited resulted for the year ended June 30, 2020,it recorded a loss after tax of Sh2.98 billion, the first loss in almost 20 years.
Kenya Power engineers carry out maintenance work at a power Sub station in Mombasa.
Kenya Power engineers carry out maintenance work at a power Sub station in Mombasa.

Kenya Power has restructured its short-term debt, and commercial debts with hopes bouncing back to profitability in the current financial year ending June 30. 

It has further sought for a moratorium on the payment of Government on-lent facilities to boost its revenue power to deal with impending drop in collection resulting from Covid-19 third wave slowdown.

According to the firm's audited resulted for the year ended June 30, 2020,it recorded a loss after tax of Sh2.98 billion, the first loss in almost 20 years.

Late last month, the power distributor reported a loss after tax of Sh939 million for the six months to December 31, 2020 compared to a profit of Sh262 million the previous year, after taking into account a tax credit of Sh6.1 billion.

It will not pay out any dividends to investors.

Speaking at a virtual Annual General Meeting on Thursday,  Managing Director Bernard Ngugi said they are actively managing costs revolving around financing, power purchase, capital expenditure and, transmission and distribution in order to improve cash flow.

It has also engaged debt collectors to claim billions of shillings in pending bills.

''We have assigned meter readers, revenue collectors and installation inspectors to specific zones under a revamped county structure  and brought on board eight Private Debt Collectors (PDCs),'' Ngugi said.

To prudently manage capital expenditure, the company has scaled down on the implementation of capital-intensive projects limiting itself to vital maintenance programmes.

Ngugi said the company is actively managing costs revolving around financing Power Purchase Agreements, days after President Uhuru Kenyatta halted the agreements and appointed a taskforce to evaluate them.

This is after it emerged that the  Kenya Power spends almost 15 times more to buy power from Independent Power Producers (IPPs) compared to that from Kengen, passing the high bill to consumers.

The firm's liquidity position has come under increased pressure as obligations have remained constant mostly due to the nature of power purchasing contracts.

Its transmission and distribution costs increased to Sh47.83 billion mainly due to an increase in provisions for trade and other receivables amounting to Sh3.27 billion owing to declined revenue collections during the height of the pandemic.

The board approved a change in accounting estimation for slow moving and obsolete stock, resulting in increased impairment of Sh3.65 billion.

Finance costs increased by 21 per cent to Sh12.48 billion due to an increase in unrealised foreign exchange losses owing to the depreciation of the Kenya Shilling.

The firm connected  500,397 customers largely through the Last Mile Connectivity project, raising its customer base by 7.2 per cent to 7,576,145.

It also  stepped-up meter inspections, and increased meter reading coverage and billing efficiency through initiatives such as the Know Your Meter (KYM) campaign under which at least 1.1million meters were inspected, leading to a recovery of Sh607 million.

This pushed the power distributor's earnings in the first half of the current year to Sh133.26 billion compared to Sh133.14 billion the previous year, representing a marginal increase of 0.09 per cent.