Penalties slapped on Kenya Power for late payments for electricity supplies by KenGen have hit Sh936.27million, underlining the power producer’s exposure to cash flow problems.
KenGen in its newly published report for the financial year ended June 2021 said interest income from penalties to Kenya Power rose by Sh136.02million over the period from Sh800.25million last year.
“Interest income from the Kenya Power and Lighting Company Plc relates to interest penalties charged to Kenya Power due to late payments of invoices. Interest on late payments accrues after 40 days,” the electricity generator said.
KenGen, whose sole customer is Kenya Power, had not been paid Sh24.35 billion by the electricity distributor as of June 2021.
Out of the amount owed by the power distributor, KenGen indicated that it expected a sales credit write-off of about Sh792.46million.
KenGen posted a net profit that declined 93.5 percent to Sh1.1 billion from Sh18.3 billion for the year ended June, blaming the drop on higher taxation. It incurred an income tax expense of Sh13.5 billion, having booked an income tax credit of Sh4.5 billion the previous year.
Its revenue for the period increased by 4.06 percent from Sh44.110 billion in 2020 to Sh45.901 billion on bigger sales from geothermal, hydro generation, and the diversification venture at Tulu Moye in Ethiopia.
KenGen’s ongoing geothermal drilling services in Tulu Moye contributed Sh1.784 billion compared to Sh440 million in the previous year.
The State earlier this year asked KenGen and other suppliers of Kenya Power not to enforce the collection of billions of shillings they are owed by the electricity distributor. This was after the utility firm defaulted on the suppliers as its finances deteriorated further, culminating in a net loss of Sh939.4 million in the year ended June 2020.
Both KenGen and Kenya Power have the National Treasury as their majority shareholder at 70 percent and 50.1 percent respectively, giving the government the influence to interfere in their commercial operations.
Kenya Power however bounced back to profitability in the year to June 2021 on account of growth in revenues. This is attributed to a huge demand for electricity and reduced costs. The firm reported a net profit of Sh1.49 billion over the financial year, an improvement from a loss of Sh939 million registered in the same period last year.
Besides KenGen, other State-owned suppliers that will now go slow in collecting their dues from Kenya Power include Kenya Electricity Transmission Company (Ketraco) in which the government owns 100 percent stake.