Companies

Higher tariffs lift Kenya Power profit 38pc

chumo

Kenya Power's net profit stood at Sh4.17 billion in the period compared to Sh3 billion the year before. PHOTO | FILE

Higher electricity tariffs introduced in July helped Kenya Power to grow its first-half profit 38.5 per cent as additional geothermal power failed to offer cheaper electricity to homes and businesses.

The listed electricity distributor posted a net profit of Sh4.17 billion in the six months to December, up from Sh3 billion in a similar period last year.

Its sales grew 40 per cent to Sh37.6 billion despite the units of electricity consumed by households and businesses going up by 5.5 per cent— reflecting that the higher earnings were driven by increased power prices.

“The rise is mainly attributed to increased sales and tariff review,” said Ben Chumo, the Kenya Power managing director.

“We are optimistic that... the company’s good performance will be sustained.” The firm said it would pay an interim dividend of Sh0.20 per share, unchanged from the same period last year.

Its share gained Sh1 to Sh17.95 at the close of trading on Wednesday and has appreciated by more than a quarter over the past six months.

The Energy Regulatory Commission (ERC) increased power tariffs in December 2013 and last July as a strategy to strengthen Kenya Power’s financial position that had weakened significantly since the last review in July 2008.

This saw an increase in the fixed charge— payable regardless of consumption levels — and the energy charge, which account for more half of the monthly power costs.

The fixed charge for domestic consumers rose to Sh150 per month from the Sh120 while the energy charge per kWh for those consuming above 50 units increased to Sh13.68 from Sh8.10.

This higher tariffs have kept electricity bills unchanged from 2013 levels despite the injection of 280 megawatts (MW) of cheaper geothermal energy to the grid.

Though the additional cheaper geothermal cut electricity costs by about a third since August, homes have seen little changes when the comparison is stretched to 13 months ago.

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The fuel cost charge on power bills due to the additional geothermal now stands at Sh2.51 per kWh from Sh5.19 in December, a drop of Sh2.68 over the period—which is lower than the Sh5.58 tariff increase.

President Uhuru Kenyatta-led administration has been calling on businesses to transfer the benefits of the “rock-bottom” electricity prices to consumers in the form of lower product costs.

Businesses have in recent years complained that expensive power makes Kenya’s products uncompetitive.

Kenya Power said it would focus on increasing new customers to sustain its earnings by connecting more homes in rural and low-income areas.

Kenya’s power generation capacity is below 2,000MW, but the government wants to add 5,000 MW of power generation capacity by 2017 to meet rising demand due to a growing economy.

“To secure revenue, we are planning to introduce smart metering systems to enhance billing accuracy for large power customers as well as reduce overall costs,” Mr Chumo said.