Kenya Power has been given a financial reprieve after obtaining a repayment moratorium on Sh25.1 billion worth of loans from international development partners.
The company will now start servicing the debt after June 2024, marking the latest in a series of debt repayment moratoriums in the wake of the Covid-19 pandemic.
While Kenya Power has returned to profitability, it has a huge debt burden that it has been unable to service without the help of the government which guarantees some of the loans.
“The company has obtained an extension of on-lent debt repayment moratorium approved by the National Treasury amounting to Sh25.1 billion to 30 June 2024,” the Nairobi Securities Exchange-listed firm says in its latest annual report.
The move helped improve the company’s working capital position for the year ended June 2022 by Sh10.7 billion from negative working capital of Sh66.5 billion.
The wider moratorium complemented other measures taken to improve the firm’s cash position including an improved level of monthly billing due to growth in sales and collection of electricity receivables and support from the State in the collection of overdue power debt from counties and national government departments and entities.
Kenya Power said it is leaning on the moratorium window to attain sustainability in annual debt service, improving both its net cash position and working capital alongside its financial ratios.
“The company aims at leveraging the debt repayment moratorium by the government to June 30, 2024, as well as the combined effect of other financial recovery initiatives, to restructure its commercial debt,” said Kenya Power.
Repayments on borrowings by the utility fell to Sh15.1 billion in the review period from Sh21.3 billion a year earlier even as repayment of the previous year’s accrued interest jumped to Sh5.9 billion from Sh4.2 billion.
On-lent borrowings by Kenya Power shot up to Sh64.1 billion in 2022 from Sh57.9 billion, including Sh7.6 billion in accrued interest.
The utility’s annual report shows 11 outstanding on-lent borrowings, which are largely denominated in euros.
The on-lent loans relate to projects including the Kenya Electricity Expansion Project and Transformer Densification.
Total borrowings by Kenya Power closed the review period at Sh103.8 billion, falling slightly from Sh105.97 billion.
About Sh17.1 billion of the debt is due to mature before the end of June with a further Sh12.3 billion falling due in the next 12 to 24 months.
Meanwhile, the bulk of Kenya Power’s debt is denominated in US dollars at Sh76.2 billion while Shilling denominated loans stand at Sh17.5 billion.
Kenya Power’s commercial borrowings stood at Sh39.7 billion at the end of June last year from Sh48 billion a year earlier, including facilities from Standard Chartered, Equity Bank, NCBA and South Africa’s Rand Merchant Bank.
Despite growing its profits in the review period by more than two-fold to Sh3.5 billion, the company has remained technically insolvent, remaining in a negative working capital position for the sixth consecutive year.
Its current liabilities, for instance, outstripped current assets by Sh55.7 billion in the review period.
