Geothermal Development Company’s net profit for the year ended June, 2018, has grown six times to Sh1.4 billion
Growth was driven by increased steam sales and absence of the prior year’s Sh991 million one-off charge to write off unproductive and abandoned wells.
But the State firm owes Kenya Revenue Authority (KRA) Sh1.1 billion in penalties accumulated from unpaid Sh3.22 billion tax.
Auditor-General Edward Ouko’s report notes that although the company has in the past asked for budgetary allocation from the National Treasury to enable it offset the liability, this is yet to be settled.
“The delayed payment of income taxes has exposed the company to penalties and interest, which continues to increase with the continued delay,” said Mr Ouko in the audit report accompanying financial results.
The firm’s tax arrears and penalty mean it requires Sh4.32 billion to be in good books with KRA.
Income tax expense for the period under review was Sh731 million, up from Sh667 million in the previous year. Penalties for non-payment of corporate tax was Sh404.4 million.
The outstanding liability has increased GDC’s current liabilities by 32 percent to Sh10.2 billion, being only Sh854 million lower than the current assets. A narrower working capital is considered undesirable for businesses.
Other obligations that need to be serviced within a year include Sh2.56 borrowings and Sh4.4 billion trade and other payables.