16 October 2008 – Power generating firm KenGen has recorded a 66 per cent decline in its profit-before-tax for the financial year ended June 30, 2008.
In a year described by the firm’s managing director Eddy Njoroge as one filled with major challenges, the firm posted Sh1.6 billion profit compared to the Sh4.7 billion it realised the previous year.
According to Mr Njoroge, foreign exchange adjustment especially due to strengthening of the Japanese Yen was attributed to the decline. The firm holds yen-dominated loans. "The profit-before-tax went down significantly as a result of a foreign exchange adjustment of Sh1.44 billion occasioned mainly by the strengthening of the yen against the Kenya shilling," said Mr Njoroge. As a result of a deferred tax amount of Sh3 billion, the after-tax profit however rose by a near 100 per cent to Sh4.8 billion from Sh2.4 billion in 2007.
Demand for power has been on the increase around the country forcing additional output in generation. This has been occasioned by increased economic activities and is expected to continue in the coming years.
"Generation capacity is expected to rise by about 500MW over the coming years; we at KenGen are proactively putting in place resources to meet this growth in demand," said Mr Njoroge.
KenGen was recently in the limelight when it engaged in a battle over tariffs with power distributor Kenya Power and Lighting Company- its main customer. In a duel that ended up before the Energy Tribunal, KenGen had sought to bill Kenya Power under the terms of an old Interim Power Purchase Agreement of Sh2.36 per unit (Kilowatt hour).
Although the issues have not been conclusively solved, KenGen won the first round of arbitration, which resulted in the suspension of the application of new wholesale power tariffs for two months.