Auditors have flagged a Ksh1.5 billion discrepancy in Kenya Power’s payments to different entities, bringing to question the transparency of the company in terms of expenditure for the financial year ended June 2022.
According to the auditor’s report, Kenya Power reported a balance of Ksh12.2 billion in terms of payables to the Rural Electrification and Renewable Energy Corporation (REREC), while the actual balance was Ksh10.7 billion, indicating a possible overstatement of around Ksh1.5 billion.
For KenGen, the sole electricity distributor, understated its payables by Ksh741.6 million after reporting a balance of Ksh23.1 billion while the actual balance was Ksh23.9 billion.
Kenya Power reported a balance of Ksh4,567,868,000 for the Kenya Electricity Transmission Company Limited (KETRACO), while the actual balance was Ksh4,643,480,000, reflecting a discrepancy of 75,412,000. For receivables from KETRACO, Kenya Power reported a balance of 1,677,814,000 against an actual balance of Ksh1,690,167,000, reflecting a discrepancy of Ksh12,353,000.
However, the management attributed the variances to disputes relating to interest charged on late payments, withholding taxes, and works carried out on behalf of the entities, among others.
“Collection of the disputed amounts was therefore in doubt,” the Auditor General said.
The company’s statement of financial position reflects a property plant and equipment balance of Ksh272,335,824,000. The balance includes Ksh23,015,299,000 in respect of work in progress.
A review of work-in-progress schedules and projects listing provided for audit revealed street lighting projects with a balance of Ksh1,239,001,000.
Kenya Power recorded Ksh3.5 billion in profits after tax as compared to Ksh1.5 billion recorded in the same period for 2021.
According to acting managing director Geoffrey Muli, the Company connected 641,237 new customers to the electricity grid, raising the total number of customers to 8,919,440.
Muli says that the overdue debt from customers decreased by 8% as at the end of June 2022.
“During the year, we enhanced our field presence to recover outstanding debt. The use of smart meters also enabled us to remotely disconnect overdue accounts and promptly reconnect customers upon payment of their bills, thereby boosting our revenue collection turnaround during the period,” Muli said.
Kenya Power’s financial performance, according to management, was impacted by a 40.4% increase in finance costs due to the depreciation of the Kenya Shilling against major world currencies and the implementation of a 15% tariff reduction in January 2022, which resulted in a 37.5% reduction in Profit Before Tax from Ksh8.2 billion to Ksh5.1 billion.
Basic electricity revenue (excluding foreign exchange surcharge and fuel recovery) recorded a decline of 0.27% from Ksh125.9 billion in the previous period to Ksh125.6 billion.
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