Kenya Power has announced a Sh. 3.19 billion full year net loss for the period ended June 2023.
This is a huge crash from the Sh. 3.26 billion net loss the company posted in the previous full year.
Kenya Power blamed the huge loss on currency fluctuation and the high cost of power purchase.
This came as the Kenya shilling continues to depreciate against the US dollar and Euro, the currencies in which most of the power purchase agreements Kenya Power signed into are made. The shilling is currently at an all time low of Sh. 150 to the US dollar.
“The positive performance above was eroded by exceptionally high finance costs which increased significantly by 89 per cent from Sh.12.76 billion to Sh. 24.15 billion mainly driven by the depreciation of the Kenya shilling against major international currencies,” Kenya Power said in a statement.
“In the period, the Kenya Shilling depreciated by 19 per cent from Sh. 118 per USD in June 2022 to Sh.140 per USD in June 2023.”
The power firm further announced that its operating profit improved from Sh. 17.1 billion to Sh. 19.2 billion.
At the same time, electricity sales revenue expanded by 21 per cent from Sh. 157.3 billion to Sh. 190.9 billion, supported by a growing customer base.
Power consumption within commercial and industrial customer segments increased unit sales from 9,163 GWh to 9,566 GWh.
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Power purchase costs increased by 22 per cent during the year to Sh. 143.5 billion as a result of a rise in units purchased to meet the rising demand for electricity.
In line with this increment, the unrealized foreign exchange losses on power purchases increased to Sh. 5.3 billion. This increase was primarily a result of the depreciation of the Kenya Shilling against the US Dollar and Euro, the currencies in which most of the power purchase agreements are denominated.
The country’s energy mix includes thermal power, whose consumption has been minimised over the years, in favour of cheaper and cleaner sources of energy such as geothermal, hydro, wind and solar.
Thermal power is necessary to steady the grid and enhance generation capacity, especially during the drought season when poor rains reduce generation from hydropower.
“The overall fundamentals remained stable despite the challenging macroeconomic environment that was characterized by a depreciating shilling and an increase in the overall cost of doing business,” Kenya Power Managing Director and chief executive officer Joseph Siror said.
The company added that it is working on restructuring its loan book to minimize the loan obligation that is dollar-denominated.