KenGen’s #ticker:KEGN unaudited financials released at the end of February 2020 were a welcome breather for investors who had waited longer than expected to dig into the company’s numbers.
However, Covid-19 has thrown a wild card and investors are left wondering how best to take a position in light of the prevailing uncertainty. One key factor to consider is how the company’s revenue base is bound to be impacted.
In April 2020, Kenya’s electricity consumption stood at 645.29 million kilowatt hours, representing a 13.29 per cent decline from the 744.23 million kilowatt hours average monthly consumption reported in the full year to March 2020.
This decline brings to light the extent to which restricted movement and constricted hours of operation for businesses could be inflicting sagging pressure on demand for electricity.
Available data shows that in the full year ended June 2018 Kenya Power spent Sh37.02 billion in buying power from KenGen, accounting for 57.10 per cent of the electricity distributor’s power purchase cost.
If demand for electricity continues to soften beyond April 2020, this is bound to rear its head in the company’s financials at the next filing. On the costs consideration, however, there are tailwinds which could potentially work for KenGen.
Tuesday starting 8:00pm, Business Redefined on NTV Kenya will be hosting KenGen’s chief executive, Rebecca Miano, to discuss the company’s outlook in light of the Covid-19 shock.