Kenya Power sales up 3.2pc in spite of dimming profits

Kenya Power electricity unit sales for the first eight months of the year rose 3.2 percent to 5,910 Gigawatt hours (Gwh), despite the expected decade-low profits from the monopoly.

Leading economic indicators from Kenya National Bureau of Statistics show the unit sales grew from previous similar period’s 5,728 Gwh, with February being the only month to record sales of below 700 million kilowatt hours (KWh).

This came in the period that Kenya’s total local electricity generation decreased from 974.62 million KWh in July to 967.62 million KWh in August.

Kenya Power’s electricity sales have been growing over a similar period. The sales were at 5117.85 Gwh in 2016 and rose to 5,633 Gwh in a similar eight-month period of 2017.

Acting Managing Director Jared Othieno said the growth was in line with rising demand. He could, however not give more details on key performance drivers given that the firm is listed on the Nairobi Securities Exchange and expects to release full year results soon.

Despite increased sales to meet growing demand, profits of the state-owned power distributor have been on decline for the fourth year running, weighed down by increased costs.

Kenya Power recently issued a profit warning saying the profits for the year ending June 2019 will be more than 25 percent lower than the Sh1.92 billion net earnings posted in the previous financial year. This will send its profits to a low of more than 12 years.

The firm tied the expected decline to costs related to electricity generation from renewable energy as alternatives to thermal power, which are expected to pay dividends in the future on cleaner and cheaper power.

“The drop in profits is attributed to among others, an increase in non-fuel costs in line with the company’s long term strategy to grow cheaper and cleaner renewable energy,” he said last month.

This, he explained, was as a result of a tariff delay and structure, which has meant that the benefits will set in later.

Agreements with the government to cut tariffs in 2017 and from November 2018 to July 2019 with the promise they will be increased from July 2019 have also turned problematic.

Energy Secretary Charles Keter last month rejected Kenya Power’s bid to increase electricity tariffs.

The utility firm had said the call for higher tariff was to reflect changing structures of power purchase costs and operating costs.