Kenya Electricity Generating Company (KenGen) has nearly doubled its net profit for the six months period ending December 31, 2019, boosted by a tax rebate from construction of a new power plant and drling works in Ethiopia.
The power producer saw its net profit jump by 98 per cent, hitting Sh8.17 billion from Sh4.12 billion reported in the similar period of 2018. KenGen attributed this to the capital allowance rising from the completion of a 165MW Olkaria V power plant in November 2019.
“The increase is as a result of capital allowances arising from the completion of Olkaria V,” the firm’s managing director Rebecca Miano said.
KenGen also attributed the growth in revenues to acquisition of two drilling contracts in Ethiopia as part of their business diversification strategy. The company bids to provide cheaper energy amid what they term a competitive market.
“We have already started implementing our diversification strategy and have ongoing geothermal drilling and consultancy contracts in Ethiopia and Kenya,” Miano said.
KenGen received a tax credit of Sh1.85 billion from the Kenya Revenue Authority (KRA) during the six-month period. This is in contrast with the preceding similar period when it had paid the same amount to KRA.
The tax credit was on account of completing Olkaria V geothermal power plant with a capacity of 165 megawatts (MW) in November last year. KRA allows for investment deduction of up to 150 percent allowance on such capital expenditures.
The firm’s profit-before tax increased by 4.3 per cent. This was on the back of lower finance costs “following final repayment of the infrastructure bond”.
Revenue from geothermal power consumption increased from Sh8.6 billion to Sh9.4 billion, which was a 2 percentage rise in contribution to the total KenGen revenue (59 per cent from 57 per cent). Hydroelectricity revenue reduced from Sh4.41 billion to Sh4.39 billion.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]