KenGen finance costs rise on expiry of loan breaks

Kenya Electricity Generating Company. FILE PHOTO | POOL

Power producer Kenya Electricity Generating Company’s (KenGen) cost of servicing loans jumped 30 percent in the half-year that ended December on the expiry of Covid-19 repayment breaks.

The power distributor says its finance costs — interest, and other charges involved in the borrowing of money — rose from Sh897 million to Sh1.17 billion, piling pressure on its net earnings.

“Finance costs rose from Sh897 million to Sh1.17 billion, owing to the expiry of a moratorium on some of the borrowings as part of Covid-19 relief measures by financiers,” said KenGen.

The Central Bank of Kenya (CBK) in March 2020 introduced the loan repayment moratorium to shield borrowers from financial distress after the Covid-19 pandemic hit the country.

The loan repayment breaks ended in March 2021, with lenders having restructured Sh1.7 trillion worth of loans, accounting for 57 percent of the banking sector’s gross loans.

KenGen’s rise in finance costs came in the period its finance income dropped marginally by Sh11 million to Sh1.03 billion as it continued to hold cash for ongoing projects.

The Nairobi Securities Exchange-listed firm had borrowings in excess of Sh133 billion by the end of June last year, with 11.92 billion maturing within 12 months.

Some Sh11.34 billion is due between one and two years while Sh32.5 billion would fall due between two and five years. A further Sh78.37 billion had a maturity above five years.

Most of KenGen’s borrowings are the Government of Kenya on-lent loans while direct borrowings amounted to Sh8.97 billion, with local banks being Cooperative Bank and NCBA.

KenGen’s net profit for the half year ended December declined by 3.3 percent from Sh3.37 billion to Sh3.26 billion on increased operating expenses.

The drop in profit was despite total revenue increasing by 11 percent to Sh27.46 billion following the installation of additional 86 megawatts of geothermal capacity in the Olkaria project.

Apart from increased finance costs, depreciation and amortization expenses rose by 31 percent to Sh7.7 billion while operating expenses increased by seven percent to Sh8.7 billion to cut operating profit.

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