The credit loss has risen from Sh501.4 million the year before when the amount owed by the power distributor stood at Sh19.3 billion.
The figures represent the initial losses suffered by the Nairobi Securities Exchange-listed firm from Kenya Power’s default.
Out of the amounts being claimed from Kenya Power in the review period, Sh6.8 billion had remained unpaid for more than two months while Sh1.4 billion represented a default of more than one year.
KenGen #ticker:KEGN expects to write off Sh581.9 million out of the total of Sh23.9 billion it is claiming from Kenya Power #ticker:KPLC, the electricity generator has disclosed in its annual report for the year ended June 2020.
The credit loss has risen from Sh501.4 million the year before when the amount owed by the power distributor stood at Sh19.3 billion. The figures represent the initial losses suffered by the Nairobi Securities Exchange-listed firm from Kenya Power’s default.
Out of the amounts being claimed from Kenya Power in the review period, Sh6.8 billion had remained unpaid for more than two months while Sh1.4 billion represented a default of more than one year.
A report by the Office of the Auditor-General found that the amounts were on average outstanding for 195 days, which was way above the 90-day credit cycle provided for in the agreement between the two firms.
The government recently asked KenGen and other State-owned suppliers of Kenya Power not to enforce the collection of billions of shillings they are owed by the electricity distributor, exposing them to cash flow problems and potential losses.
The move comes after the utility firm defaulted on the suppliers as its finances deteriorated further, culminating in a net loss of Sh939.4 million.
“The State and energy sector public organisations through the Ministry of Energy, have been requested to ease pressure on supplier dues payable by KPLC i.e. the amount to be settled on a payment plan including a moratorium on dues payable,” Kenya Power says in its latest annual report for the year ended June 2020.
The firm also owed private power producers Sh20.5 billion and it was not immediately clear how much of the amount is in default and whether they will also be subject to debt restructuring.
The move to delay and stretch out payments to suppliers is the clearest indication of the depth of the company’s financial crisis, which will get worse as the debt balloons with ongoing electricity generation and offtake.
KenGen’s interim results show that its current assets –comprising receivables from Kenya Power — had increased by Sh7.5 billion to Sh41.5 billion in the six months to December.
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Note: The results are not exact but very close to the actual.
