Kenya Power has reported an Sh3.82 billion ($33,450,087.47) profit after tax for the half-year to December 31, as the company cements its way back into profitability.
This is compared to Sh138 million ($1,208,406.30) posted in a similar period in 2020.
Profit before tax for the period under review was Sh5.66 billion, compared to Sh332 ($2,907,180.38) million realised in a similar period the previous year.
Management has attributed the stellar performance to an increase in sales, enhanced system efficiency and lower operating costs.
Electricity sales recorded a 366GWh increase to 4,562GWh, an 8.7 per cent growth compared to a similar period in 2020.
“This was driven by an increase in customer connectivity, as well as improved supply quality and reliability due to enhanced preventive maintenance works, network refurbishment, and accelerated faulty meter replacements,” management said in a press statement.
This, combined with a 2.33 per cent improvement in system efficiency, which stood at 77.13 per cent as of December 31, 2021, led to a 12.9 per cent increase in electricity revenue which grew to Sh69.447 billion.
Operating costs decreased from Sh20.1 billion to Sh19 billion as a result of enhanced cost management and resource optimization initiatives that the company is implementing as part of its turnaround strategy, it said.
The electricity distributor bounced back to profitability last year after a series of losses.
It reported Sh1.5 billion in net earnings for the year ended June 30, compared to an Sh939 million loss last year.
In the half-year to December, non-fuel power purchase costs increased from Sh38.123 billion incurred in the previous period to Sh40.487 billion mainly due to additional unit purchases to support increased demand.
Similarly, fuel costs increased from Sh4.618 billion to Sh10.871 billion mainly due to a 314 GWh increase in units purchased from thermal plants to 709 GWh due to low hydrology resulting from delayed rains, and an upsurge in fuel prices.
Finance costs increased to Sh6.8 billion from Sh6.601 billion the previous period, mainly due to a rise in unrealised foreign exchange loss resulting from the depreciation of the Kenya shilling against major currencies.
Overdue customer debt, for the first time in five years, recorded a reduction of Sh900 million as a result of enhanced field presence, continued government intervention with state agencies, and increased customer engagements, it said.
“In the second half of the year, the business will primarily focus on domestic and SME customers who currently account for 67 per cent of the company’s outstanding debt,” management has affirmed.
It said the company continues to roll out a proactive strategy to enhance its cash position which is premised on the prioritisation of payments of outstanding obligations.
As a consequence, the company reduced trade and other payables by over Sh4 billion.
In addition, the business cleared overdrafts amounting to Sh3.6 billion.
Further to this, the company closed the first half of the financial year with a cash position of Sh8.347 billion which includes ring-fenced funds projects, receipts from the government for the Last Mile, and street lighting programmes, as well as funds for scheduled loan repayments.
“As Kenya Power marks a century of service to Kenyans, the Company is using this opportunity to take stock of the state of its business which is operating in a highly dynamic and complex environment, whilst laying the foundation for its future,” management said.
As a consequence, the business is at the height of concerted reforms aimed at enhancing its ability to deliver on its core mandate, by making it more efficient, agile and customer-led, it added.