Kenya Power has paid KES 7.9 billion of the KES 8.17 billion it owed to US energy firm Ormat Technologies, significantly reducing its outstanding debt and signaling improved liquidity for the state-owned utility.
The debt, which had accumulated by December 2023, has now been cleared by 97.1%, leaving a balance of KES 230 million.
Ormat Technologies, through its subsidiary OrPower 4, is Kenya’s second-largest geothermal power producer and the third-largest overall power producer, after KenGen and Lake Turkana Wind Power. The company operates four geothermal plants in Naivasha’s Olkaria region, with a combined capacity of 150 megawatts.
Ormat revealed that Kenya Power has been gradually settling the debt in tranches throughout 2024.
“As of June 30, 2024, the amount overdue from KPLC in Kenya was KES 5.13 billion, of which KES 2.1 billion was paid in July and August 2024,” Ormat stated.
The payments began in January and February, with the first tranches totaling KES 4.1 billion. In April, an additional KES 1.6 billion was transferred, followed by KES 2.1 billion in July and August. Despite these efforts, Ormat noted that Kenya Power still owes KES 2.8 billion, reflecting new power purchase costs that have accrued this year.
Kenya Power, one of the largest buyers of foreign currency in the country, faces significant financial pressure due to its vulnerability to forex market fluctuations.
The depreciation of the Kenyan shilling last year led to ballooning finance costs, reaching KES 24.15 billion in the year to June 2023, up from KES 12.7 billion the previous year. This sharp increase contributed to a net loss of KES 3.19 billion for Kenya Power, reversing the previous year’s profit of KES 3.26 billion.
