Increased Generation Powers KenGen’s Half Year Pretax Profit by 121%

Kenya Electricity Generating Company (KenGen) profit before tax has increased by 121% to KES 8,384m from KES 3,790m for the six-month period ended December 2015.

The leading energy generator delivered strong growth in revenues across all areas, with the impressive results reflecting the full impact of the 280MW Olkaria geothermal plants, which became fully operational in December 2014.

KenGen Managing Director and CEO, Eng. Albert Mugo, attributed the company’s impressive performance and solid financial foundation to new capacity, additional generation and other strategic initiatives undertaken to diversify revenue base.

“To sustain our current direction, we are stepping up investments to drive continued generation capacity growth and we anticipate this will result in sequential revenue growth in geothermal and wind segments going forward,” he said at an investor briefing in Nairobi.

Eng. Mugo disclosed energy unit sales from geothermal grew by 35%, while favourable hydrological conditions lead to 9% growth in sales from hydro plants.

Wind generation also had full impact following the completion of Ngong 20.4MW plants in September 2014. Thermal generation, however, declined by 33% because geothermal was given priority.

The company’s total revenue increased by 52% to Kshs18,523m in December 2015 from Kshs12,183m in December 2014.

Electricity revenue grew by 27% to Kshs14, 757m in December 2015 compared with Kshs11,659m in December 2014 as a result of growth in capacity and energy revenue. The 280MW Olkaria Plants contributed significantly to capacity revenues while Wellheads and 20.4MW Ngong Wind farm also contributed to energy revenue.

The initiatives include steam management and drilling services. Steam revenue includes arrears of Kshs2,479 m for previous years following the signing of agreement between KenGen and Geothermal Development Company (GDC) in September 2015.

Other incomes increased to Kshs998m in December 2015 compared with Kshs352m in December 2014. This was significantly impacted by KenGen’s initiatives to diversify revenues.

During the period under review, the company’s operating expenses increased marginally by 1% from Kshs3,942m to Kshs3,998m while depreciation expenses increased by 47% from Kshs3,074m to Kshs4,519m. This was as a result of the completion of Olkaria 280MW plants in December 2014 as well as additional depreciation from asset revaluation which was carried out in June 2015.

Eng. Mugo said continued investment has seen total assets increased by 4% to Kshs355,009m in December 2015 from Kshs342,520m in June 2015 due investments in Wellheads and drilling additional wells to secure steam t for the upcoming power plants.

The power plants whose implementations are at an advanced stage are the 70MW Olkaria I Unit 6, 140MW Olkaria V and 140MW Olkaria VI and once operations will see the energy generator complete our target contribution of 844MW towards the 5000MW+ Government goal.

Article by Juma Fred.