Kenya Power nearly doubles net profit on higher tariffs
Ben Chumo, the Kenya Power managing director. PHOTO | FILE
What you need to know:
Kenya Power’s net earnings increased 88 per cent to Sh6.4 billion in the period to June 2014 compared to Sh3.4 billion a year earlier.
This is the fastest growth in revenue and net profit by the power firm in the last decade, thanks to the hike in electricity prices by about 25 per cent last year.
Higher electricity tariffs effected in December helped Kenya Power to nearly double its net profit for the period ended June.
The listed electricity distributor’s net earnings increased 88 per cent to Sh6.4 billion in the period to June 2014 compared to Sh3.4 billion a year earlier.
Its sales grew by a third to Sh62.5 billion despite the units of electricity consumed by households and businesses growing by 9.8 per cent – reflecting that the higher earnings were driven by increased power prices.
This is the fastest growth in revenue and net profit by the power firm in the last decade, thanks to the hike in electricity prices by about 25 per cent last year.
“The rise is mainly attributed to increased sales, tariff review and enhanced system efficiency,” said Ben Chumo, the Kenya Power managing director.
The stellar growth has seen the company pay a total dividend of Sh0.50 per share after shareholders missed a payout last year due to a weak cash position amid heavy borrowing.
Electricity sales increased marginally by 9.8 per cent to 6.7 billion units from 6.1 billion units in 2013.
The utility firm added 443,000 new customers to its grid bringing the total number of electricity connections to 2.7 million.
Its finance costs doubled to Sh4 billion from last year’s Sh2.4 billion, indicating that Kenya Power chalked up additional debt to finance electricity network expansion.
The Energy Regulatory Commission (ERC) increased power tariffs in December last year as a strategy to strengthen Kenya Power’s financial position that had weakened significantly since the last review in July 2008.
Energy charges for those using between 51 kWh and 1,500 kWh rose to Sh11.62 per unit of electricity consumed from December compared to the previous charge of Sh8.1 per unit.
Those using more than 1,500 Kwh are now paying the energy charge at the rate of Sh19.57 per unit from the previous Sh18.57.
Power bills are expected to drop as the government turns to cheaper renewable sources of energy such as geothermal.
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