Kenya Power pays Sh2.58bn debt to US firm in two months

“We have historically been able to collect substantially all of our receivable balances. As of December 31, 2024, the amount overdue from KPLC in Kenya was $38.3 million of which $ 20 million was paid in January and February of 2025,” Ormat said.

“The company believes it will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC’s obligations under its power purchase agreement, the company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as non-payments that are caused by government actions and/or political events),” it said.

The US firm operates through its wholly owned subsidiary, OrPower 4, at the Olkaria III complex in Naivasha, where it has an output capacity of 150 megawatts (MW) of geothermal power.

The company sells the electricity to Kenya Power under a 20-year power purchase agreement expiring between 2033 and 2036.

Ormat said revenues from power sales in Kenya in 2024, accounted for 13 percent of its total global revenue. The company booked Sh90.73 billion ($702,264,000) in total revenue from its global electricity business segment in 2024, up from Sh8.14 billion ($666,767,000) the previous year—meaning Kenya accounted for about Sh11.79 billion of Ormat’s income from electricity sales in 2024.

Besides Kenya, Ormat has international operations in Turkey, Guadeloupe, Guatemala, Honduras and Indonesia.

“In 2024 a substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guatemala, Guadeloupe, and other countries. Thus, disturbances to and challenges facing our foreign operations, especially in Kenya, could have impacts on our business ranging from moderate to severe,” the US firm said.

The debt payments to Ormat came in the wake of Kenya Power improved financial performance, which reported an after-tax profit of Sh9.97 billion for the half year ended December 31, 2024, driven by increased electricity sales, reduced distribution and finance costs on the back of the stability of the Kenyan shilling.

The performance saw Kenya Power declare an interim dividend of Sh0.20 per share, the first in nine years. The dividend payout amounted to Sh390.29 million as net profit for the six months increased from Sh319 million in the previous year.

During the period, Kenya Power’s electricity sales increased by five percent to 5,506 gigawatt hours (GWh) compared to 5,225 GWh in the corresponding period of the previous financial year. The electricity sales, however, fell 5.4 percent in terms of absolute value to Sh107.42 billion.

“The increase in electricity unit sales was driven by higher consumption as a result of improved network reliability, the connection of new customers, and improved outage resolution timelines supported by the availability of critical materials, including meters and transformers,” said Kenya Power CEO Joseph Siror during the release of the half-year results.