KenGen half year pretax profit down 11p.c

Kenya Electricity Generating Company (KenGen) has recorded Ksh4,095 million after tax profits for the financial half year ended December 31st, 2017.

The profit before tax, however, declined from Kshs 6,566 million to Kshs 6,081 million due to increased depreciation and amortisation cost.

KenGen earned Kshs 18,613 million during the period compared to Kshs 17,739 million in the previous period from electricity sales and other income which represented a growth of 4.93%.

The Company Managing Director and Chief Executive Officer, Mrs. Rebecca Miano, attributed the performance to higher energy revenues from geothermal and increased steam revenue following the completion of the Olkaria -Suswa transmission line.

“Our electricity sales increased from Kshs 14,676 million to Kshs 14,924 million due to growth in revenues from geothermal generation,” said Mrs. Miano.

The company has achieved the impressive results despite the severe drought that has affected its hydro generation.

The drought, which began last year has seen water levels at many of its hydros fall drastically and the company is likely to close the stations in the next few weeks if the trend continues.

But the falling water levels at the dams will be of minimal effect as the KenGen has taken measures to cushion power consumers against high cost of power and blackouts in the event of closure of its hydro power stations following prolonged drought

The company is implementing an ambitious programme to scale up power generation from geothermal and wind sources to offset any deficit that may result from the closure.

According to the half year financial results, KenGen’s steam revenue increased from Kshs 2,465 million to Kshs 3,154 million due to completion of new wellheads plants and improved power evacuation following completion of Olkaria-Suswa transmission line.

The expenses increased by 5.83% from Kshs 4,392 million to Kshs 4,648 million mainly due to costs associated with maintaining existing and new power plants.

“The completion of Olkaria –Suswa transmission line which helped improve dispatch of geothermal hence steam utilization also led to an increment of steam costs from Kshs 1,279 million to Kshs 1,793 million,” said Mrs. Miano.

Depreciation and amortisation expenses increased by 14.7% from Kshs 4,529 million to Kshs 5,195 million due to capitalization of completed Wellheads and Wells towards the end of the last financial year.

Interest income increased from Kshs 632 million in December 2016 to Kshs 732 million in December 2017 due to investment of surplus funds earmarked for capital projects during the period.

Mrs. Miano explained that interest expenses increased due to completion and capitalization of Wellheads which were commissioned during the period.

KenGen continues is on course to complete the ongoing construction of the 158MW Olkaria V power plant by 2019. The Company has put in place measures to improve revenue while optimizing costs in the second half of the financial year.

The power plant is part of the company’s ambitious green energy development agenda aimed at delivering 721MW of renewable energy by year 2020 at an investment close to KShs 135 Billion.

The project is funded by Japan International Co-operation Agency (JICA) and the Government of Kenya.

The company is also developing other green energy projects which will ensure Kenyans benefit directly from reliable, clean and affordable electricity.

“Our focus is on geothermal energy, which is an eco-friendly, renewable and reliable source that can reduce consumers’ utility costs by up to 50%,” said Mrs. Miano.

The power projects  which are at different stages of procurement are Olkaria I Unit 6, 70MW, Ngong Wind Phase III 10MW, Olkaria VI PPP 140MW, Olkaria I Rehabilitation 50MW, Olkaria I AU & IV topping plant 40MW, Modular wellheads 50MW, Meru Wind Farm 80MW among others.