On Tuesday, the directors of Kenya Power announced the company’s audited financial results for the year ended 30 June 2017.
The net profit before tax decreased by 9.7% to $106,023 from $115,661 in the previous year. The firm attributed this to increased transmission and distribution costs as a result of maintenance activities on the expanded network.
“Electricity sales grew by 4.5% from 7,912 million units the previous year, to 8,272 million units in the period under review. This, combined with an improved average yield, led to 5.6% increase in sales revenue, from Shs. 87,081 million [$838,544] the previous year to Shs. 91,952 million [$886,736],” the firm noted.
“Power purchase costs, excluding fuel and foreign exchange costs, decreased by Shs 784 million [$7 million] from Shs 51,400 million [$491,563] the previous year, to Shs.50,616 million [$481,925].
This is attributable to a reduction in units purchased from the hydro generation due to poor hydrology in the year and reduced geothermal generation in the year,” Kenya Power added.
The units purchased from hydropower sources and geothermal reduced by 13.2% from 3,787 GWh to 3,341 GWh and 3.4% from 4,608 GWh to 4,451 GWh, respectively.
Fuel cost increased by Shs 9,434 million [$86,746] from Shs 12,690 million [$125,300] the previous year to Shs 22,124 million [$212,047] due to increased usage of thermal sources during the year. Electricity units generated from thermal plants increased by 66.9%, from 1,297 GWh the previous year to 2,165 GWh.
Transmission and distribution costs increased by 16.6% from Shs 28,651 [$276] to Shs 33,417 million [$318,071] in the year.
The power company said this rise is due to higher operational and maintenance costs on the expanded electricity network facilities, depreciation due to increased capital investment and the rising cost of doing business.
Finance costs and interest income
Finance income decreased to Shs46 million [$442,731] during the year compared to Shs965 million [$9 million] realised the previous period due to reduced bank balances. On the other hand, finance costs decreased by Shs160 million [$1.5 million] during the year to Shs5,651 million [$57,747] compared to Shs5,811 million [$57,748] the previous year. The reduction is attributable to restructuring of the loan portfolio in the last financial year.
The Company recorded a net profit before tax of Shs10,912 million [$105,872] during the year compared to Shs12,083 million [$115,514] the previous year. The decrease was mainly attributed to increase in transmission and distribution costs by Shs4,765 million [$48,100] and decreased finance income.
The net profit after tax was Shs.7,266 million [$67,381] compared to Shs.7,197 million the previous year, after taking into account a tax charge of Shs.3,646 million [$38,500].
Commitment to sustainable operations
Managing director and CEO, Kenneth Tarus, highlighted in his statement: “We are building on the successes in our core business areas in the recent past to align, grow and transform our business for long-term sustainability, creating value for our customers, shareholders and other stakeholders.
“Revenue growth is fundamental to the sustainability of our business. To grow our revenue, we are pursuing multiple strategies to increase and supplement electricity sales. These include growing our customer base, enhancing efficiency, promoting productive use of electricity, diversifying our revenue streams and seeking cost reflective tariffs for our customers.
“In our endeavour to enhance service delivery to customers and improve our bottom line, we have adopted feeder based approach to network management.” Read more…
He concluded: “The feeder management concept is a paradigm shift in our business operations where members of staff are assigned to cluster of feeders for maintenance, connectivity, customer care operations and commercial cycle activities. The strategy involves alignment and optimisation of human and capital resources to enhance accountability, efficiency and productivity going forward.
“As part of our initiative towards securing the Company’s long-term viability, we are adopting a reporting mechanism that will entrench sustainable pillars in our business strategies and processes.
“In this regard, we are developing a comprehensive sustainability framework that will provide guidelines for the introduction, development and maintenance of proactive financial, social and environmental management processes and procedures.”
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