There is no let up for the Kenya power and Lighting Company as it slowly sinks into the red.
The company has posted a 91.98% decline in net profit to Sh262 million ($2.62 million) from Sh3.27 billion ($32.7 million) for the financial year ended June 2019 on high cost of buying electricity.
“This was mainly attributable to increase in non-fuel power purchase costs by Sh18 billion from Sh52.7 billion to Sh70.8 billion following the commissioning of two power plants with a combined generation capacity of 360MW during the period,” said Kenya Power.
Increased power purchase and higher finance costs depressed its bottom-line despite revenue rising by 1.34% to Sh133.1 billion on more electricity sales.
“In addition finance costs rose by Sh3.2 billion due to increased levels of short term borrowings and foreign exchange losses.”
Power purchase costs, including fuel and foreign exchange costs, increased by Sh6 billion to Sh90.1 billion.
Last year, the utility company issued a profit warning, for the year ending June 2019 of more than 25% lower than the Sh1.92 billion after-tax profit posted in the financial year ended June 2018.
In 2018, it issued a similar warning and the shock decline was up to 63.7% from the Sh5.3 billion posted in 2017.
This saw Kenya Power slide into technical insolvency as at June 2018, where current assets stood at Sh54 billion less than current liabilities of Sh106 billion resulting in negative working capital of Sh51 billion.
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