The Auditor General Nancy Gathungu has voiced concerns over the viability of Kenya Power going forward after various interventions meant to resuscitate the highly indebted firm failed to bear fruit.
Report on Kenya Power and Lighting Company Plc for the year ended June 30, 2019, the watchdog warns that the company’s current liabilities of Sh115.19 billion exceeded its current assets of Sh44.22 billion by Sh70.97 billion deficit, as at June 30, 2019.
It observed that the company has remained in a negative working capital position for the third consecutive year.
As disclosed by the board and management in the past and current financial statements, Auditor General notes, strategic initiatives have been undertaken to improve the financial reports of the company.
“However, these initiatives appear not to have the intended results. These conditions indicate that a material uncertainty exists which may cast significant doubt on the company’s ability to continue as a going concern,” said the Auditor General in the annual report.
Gerald Muriuki, analyst at Genghis Capital, however, downplayed the effects the Auditor General’s concerns on the Operations of Kenya Power saying the market was already used to negative reports about the company.
“From a reporting and accounting perspective, yes, there are those concerns. But about the business operating, that won’t be a problem, the business will still be running” said Muriuki.
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“The market is now used to such news. While it is negative, I don’t expect that the market will overreact, just some small movements in the short term,” he added.
Audited financial report for the year ended June 30 2019 shows that the utility company’s profit before tax stood at Sh334 million down from Sh4.97 billion the previous year.
During the period under review, non-fuel power purchase costs increased by 34 per cent to stand at 70.9 billion up from Sh52.8 billion the previous year due to growth in total units purchased and the entry of two new renewable energy generation plants with combined capacity of 360 MW.
Entry of Lake Turkana Wind Power contributed Sh11.1 billion of the total non-fuel power purchase costs, the Kenya Power annual report says. “The increased cost eroded the entire revenue gains,”the report adds.
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