Monopoly Kenya Power and Lighting Company (KPLC) is issuing a profit warning for the third year in a row in 2020, this time warning that the company will register lower earnings than in 2019 citing low growth in electricity sales.
“The COVID-19 Pandemic has adversely affected our business operations leading to slow growth in electricity sales, and an increase in financing costs, resulting in reduced earnings,” read a statement from Imelda Bore.
The slow growth in electricity is due to the closure of shop by heavy manufacturers due to the global pandemic. These manufacturers account for more power sales than households.
In 2019, the power firm had blamed the ever-rising non-fuel costs for digging into its incomes. “This was mainly attributable to increase in non-fuel power purchase costs by Sh18 billion from Sh52.7 billion to Sh70.8 billion following the commissioning of two power plants with a combined generation capacity of 360MW during the period,” said Kenya Power.
KPLC has posted a 63.7 percent decline in net profit to Sh1.92 billion in the financial year ended June 2018 blaming higher costs.
Kenya Power shareholders will for the second year in a row miss out on dividends after the firm recorded a massive profit drop.
“While many are surprised to note that a monopoly distributor is making losses, the “monopoly” is in name only and the company is used for political gain and is helpless to roadside declarations,” said Mihr Thakar, a financial analyst had said.
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