Kenya Power saw a reversal in fortunes, recording a Kshs 1.1 bn half-year loss for the period ending 31st December 2022, which lies in stark contrast to the Kshs 3.8 bn profit recorded in the period ending 31st December 2021.
This is despite topline revenue generated increasing by 3.7% to Kshs 86.7 bn during the period from Kshs 83.6 in H1’2022. Kenya Power reckons that revenue generated would have been higher by Kshs 6.6 bn, bar the 15.0% reduction of the end user electricity tariff cut that was in force during the period.
Kenya Power attributed the loss to this reduction in electricity tariffs and an inflated Cost of sales which grew by a significant 19.5% to Kshs 66.1 bn from Kshs 55.3 bn in a similar period last year, given that actual power production increased by 4.4%.
Additionally, increased foreign exchange losses, with the Kenya shilling depreciating against major currencies saw operating costs increase to Kshs 21.7 bn from Kshs 19.0 bn in H1’2022.
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Notably, the cost of sales increase was driven by an 8.4% increase in non-fuel purchase costs, which increased to Kshs 43.9 bn from Kshs 40.5 bn in H1’2022 following growth in demand.
The high cost of sales was also corked by the elevated fuel prices during the period, with the company recording a 38.7% increase in fuel costs to Kshs 15.1 bn from Kshs 10.9 bn recorded in H1’2022.
The company’s losses were also underpinned by the increase in finance cost by 9.1% to Kshs 7.3 bn from Kshs 6.8 bn recorded in H1’2022, with the utility company attributing the increase in finance cost to the rise in unrealized foreign exchange loss emanating from revaluation of its foreign-denominated debts as the Kenya shilling continues to plunge against major currencies.
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To upturn the performance, the company disclosed a couple of measures such as allowing settlement of bills using major foreign currencies such as USD and EURO for a portion of its customers whose proceeds are in major foreign currencies.
This will reduce the high need of purchasing Foreign currency to meet payments to power generators and help counter the overall loss as the Kenyan shilling has been plunging against the dollar, having depreciated by 9.0% against the dollar in 2022 to close the year at 123.4 from 113.1 at the beginning of 2022.
Further, the Company earmarked increasing electricity sales, enhancing system efficiency, and prudently managing its resources as the main paths to profitability.
However, a dark cloud hangs on the power tariffs, which the company had indicated are not cost of power production reflective, with Kenyans on the other hand championing for lower electricity costs to cushion their pockets and income.
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