Kenya Electricity Generating Company (KenGen) #ticker:KEGN first half net profit to December 2019 surged 98 percent to Sh8.17 billion boosted by tax savings and drilling works in Ethiopia.
The growth, from the Sh4.12 billion profit in the half-year 2018, lifted the power producer’s bottom-line beyond the Sh7.88 billion it earned for the full-year ending June last year.
“The increase is as a result of capital allowances arising from the completion of Olkaria V,” the firm’s managing director Rebecca Miano said on Friday.
KenGen received a tax credit of Sh1.85 billion from the Kenya Revenue Authority (KRA) during the six-month period. This is in contrast with the preceding similar period when it had paid the same amount to KRA.
The tax credit was on account of completing Olkaria V geothermal power plant with a capacity of 165 megawatts (MW) in November last year. KRA allows for investment deduction of up to 150 percent allowance on such capital expenditures.
KenGen’s revenue during the six months grew 4.8 percent to Sh19.63 billion. This was supported by 6.4 percent increase in electricity revenue to Sh16 billion.
The power producer further said its other income grew by Sh268 million or 127 percent to Sh479 million as a result of having clinched two drilling contracts in Ethiopia.
KenGen has released both the half-year and full-year results at the same time following a nod from the Capital Markets Authority (CMA) to do so.
The results are unaudited since the government is yet to appoint an auditor general after the office was left vacant following the retirement of Edward Ouko last year.
The electricity generator full-year to June 2019 net profit dropped marginally from Sh7.891 billion to Sh7.884 billion on higher operating costs.
However, Ms Miano said the firm sees increased revenue going forward hinged on increased power sales and the revenue diversification strategy.
The firm is still constructing 83MW Olkaria I unit 6 geothermal plant.
“We have ongoing geothermal drilling and consultancy services projects in Ethiopia and Kenya. These initiatives are expected to have positive contribution to our future performance,” said Ms Miano.