The government has stated it will ensure Kenya Power pays its debt to KenGen and other power producers.
This comes after concerns were raised that the electricity distributor’s default could hurt the entire supply chain if it is not resolved in the near term.
As of June 2020, Kenya power owed Kes 23.9 billion to the energy distributor, the largest claim yet. KPLC also owes independent power producers Kes 20.5 billion even though it was not immediately clear how much of the amount is in default.
During KenGen’s virtual annual general meeting held last week, Energy PS Joseph Njoroge said there were plans to ensure both companies are financially stable.
”The government is a shareholder in both KPLC and KenGen and will make sure that both companies are [financially] feasible There have already been interventions including deferring KPLC’s obligations to the National Treasury.” Energy PS Joseph Njoroge
Kenya Power said it is working with the government on several initiatives to improve its liquidity position, including renegotiating loan terms and deferment of interest. Others are the impending review of the Power Purchase Agreements.
However, the government did not have a timeline of when the debt repayment will commence.
Last year, KenGen indicated they were planning to sell power directly to customers as soon as the related regulations are finalised, which would give competition to the country’s sole electricity distributor, Kenya Power.
The Ministry of Energy has completed drafting the regulations to bring to fore the operation of the Energy Act that was signed into law by President Uhuru Kenyatta in March 2019. The Act allows other firms to apply for retail licences to sell electricity.
KenGen, which contributes over 70 per cent of electric supply to Kenya Power, has been keen to target large-scale consumers.
KenGen’s profits
During the year ended June 2020, KenGen announced a Kshs.13.9 Billion profit before tax which translated into 18% growth from the previous financial year during which the company announced Kshs 11.6 billion profit before tax.
The company’s profit after tax improved from Ksh.7.88 billion to Kshs.18.4 billion, an increase that the company attributed to a Kshs 8.1 billion reduction in corporate tax rate from 30% to 25% as per the Government’s relief measures to support companies navigate through the COVID-19 crisis.
KenGen will pay its shareholders Kshs.1.98 Billion in dividends.
This follows approval by shareholders of the Board’s recommendation for a first and final dividend payment of Kshs 0.30 per ordinary share of Kshs 2.50.
The dividend payout for the year ended June 2020 is an increase from the Kshs 1.65 billion paid to the shareholders in 2019.
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