KPC loses Sh2.8bn as Corona cuts demand

Corona-driven drop in fuel consumption has left Kenya Pipeline Company (KPC) with at least Sh2.8 billion loss in revenues in the three months to June, breaking earnings climb tradition of the cash-rich State firm.

Travel restrictions and imposition of a countrywide curfew dampened petroleum sales and reduced use of pipelines to ferry the commodity in what the firm says has hit its top line by 40 percent.

KPC Managing Director Irungu Macharia told senators Thursday that the firm had suspended fuel loading in two of its key depots (Nakuru and Mombasa) to minimise chances of spreading the coronavirus as some of the measures that have driven the revenue slump.

“The effect of Covid-19 led to about 40 percent reduction in revenue. We are optimistic of total business recovery and growth as we restart the economy throughout the region,” Mr Macharia told the Senate Standing Committee on Energy

The company throughput revenue was, however, up 10 percent in the 2017/18 financial year to Sh27.7 billion with the average revenue per quarter ranging at about Sh7 billion. This puts a 40 percent drop at about Sh2.8 billion with the figure expected to go above Sh10 billion for the entire year should the Covid-19 economic pressure persist.

KPC, which made Sh8.5 billion net profit in 2018 has also cut down on staff numbers to reduce exposure to the virus in what may also impact the company’s productivity in the long-run.

“In effort to safeguard employee's safety, staff reporting to work were scaled down to 40 percent and a fully equipped isolation unit designated at the KPC clinic,” Mr Ngugi told senators .

Although pump prices have remained low, motorists were forced to park their cars after the government announced a lockdown in major towns including Nairobi, Mombasa, Kilifi, Kwale and Mandera for varied durations since April.

As a result, petrol consumption reduced by 41.5 million litres in April, the same month when petrol pump prices dropped by the largest margin since the government began regulating pump prices

Data from the Energy and Petroleum Regulatory Authority also shows that diesel consumption dropped by 62.3 million litres over the same period as buses, lorries and tractors which largely consume the fuel put a brake on journeys.