Kenya Power posts first loss in 17 years

Kenya Power #ticker:KPLC has posted the first loss in 17 years, turning the spotlight on the push by the utility firm to raise retail tariffs for homes and businesses to improve its performance.

The Treasury’s disclosures to Parliament shows the electricity monopoly returned a net loss of Sh2.98 billion in the financial year ended June 2020.

But Kenya Power, which is listed on the Nairobi bourse, is yet to make public its financial statements for the year to June.

This offers investors a clearer picture on the performance of the utility, which in June issued its third profit warning in a row.

The firm cited reduced electricity consumption due to coronavirus control measures and the rising cost of buying wholesale power from firms like KenGen.

It has also cited lost earnings from the delayed implementation of higher tariffs that has stalled since September last year. The firm has been pulled down by the rising cost of buying electricity from power generators like KenGen that jumped by Sh18 billion last year, blunting the impact of an increase in sales.

Kenya Power had made an application to the regulator for an increase in electricity prices by up to a fifth, saying it is key to reversing its reducing profitability — which has seen its earnings drop for three years in a row.

But the State has frozen the review, which combined with the flat sales has pulled the firm to losses.

KenGen reckons that demand for its electricity had dropped by about eight per cent due to Covid-19 restrictions that have seen businesses cut down their activities in response to the pandemic.

The State had banned public gatherings, closed bars and schools and imposed a 9pm-4am curfew, which was previously longer, starting from dusk to dawn until June 6 when it was reviewed.

Kenya Power’s net profit for the six months to December declined 71.8 per cent to Sh693 million, indicating that its troubles started ahead of Kenya announcing its first case of Covid-19 on March 13.