KPLC Posts Ksh 8.2 Billion In Pre-Tax Profits After A Series Of Losses

Kenya Power has posted a profit before tax of Kshs.8.2 billion for the period ending 30^th June 2021, representing a 216% YoY growth compared to a loss before tax of Kshs.7.04 billion.

The strong performance was mainly driven by growth in sales and revenue, as well as a double-digit reduction in costs and expenses.

Unit sales for the year under review recorded a 5% growth from 8,171 GWh to 8,571 GWh which was mainly driven by 716,206 new customer connections who contributed an additional 400 GWh, and a rebound of the economy from the effects of the Covid-19 pandemic.

All customer segments recorded growth, with Commercial and Industrial growing by 4.8%, Small Commercial by 5.1%, domestic customers by 4.9%, and Street-lighting by 10.2%.

Revenue recorded an 8.2% jump from Kshs.133.3 billion the previous year to Kshs.144.1 billion, mainly due to an expanded customer base, and heightened revenue protection activities driven by increased field presence.

Commenting on the results, the Chairman of the Board of Directors, Vivienne Yeda, noted that the strong performance was a credible indicator that the turn-around strategy, rolled out the previous financial year, was on course. The strategy focuses on five core focus areas, namely improving customer experience, growing sales, enhancing revenue collection, enhancing system efficiency, and prudent cost management.

“As a Company, we are pleased with this set of results because it is a clear demonstration that the investments we have made in driving a strong performance by the core business lines are beginning to bear fruits. Having said that, we are cognizant of the fact that a lot more needs to be done to fully transform Kenya Power into a 21st-century organization,” said the Chairman.

In the year under review, the Company also undertook greater cost management and resource optimization initiatives. As a result, operating expenses dropped by 17% from Kshs.47.8 billion to Kshs.39.9 billion mainly due to a reduction in provisions for trade and receivables from Kshs.3.27 billion the previous year to Kshs.354 million, which was mainly driven by accounting for revenue, and enhanced revenue collection initiatives.

Finance costs also registered a 27% reduction from Kshs.12.5 billion in FY2020/21 to Kshs.9 billion due to a decrease in interest on loans and overdrafts as a result of a Kshs.20.26 billion repayment of commercial loans which included the partial conversion of overdrafts into a term loan.

System losses, which had risen to 25.21% in the first half of the year, were reduced to 22.7% in the second half. This followed the deployment of a focussed approach premised on the timely metering of customers, replacement of faulty meters, curbing electricity theft arising from meter by-passes and illegal connections, as well as the deployment of data analytics to identify and deal with electricity theft in the large power customer segment. Overall system efficiency stood at 76.05% at the end of June 2021.

To further improve system efficiency, the Company is planning to increase the coverage of the Advanced Metering Infrastructure (AMI) project, which presently covers 6,718 or 80% of large power customers to full coverage by the end of 2022. Plans are also underway to expand SME coverage, which stands at 54,272 SMEs, by a further 67,000 during this financial year.

The Company has also completed the regional border metering project and is stepping up the implementation of feeder and transformer metering, currently at 33% and 95% completion respectively, to aid in identifying high loss feeders for targeted interventions.

“Kenya Power is a great company with a century’s worth of experience of powering Kenya’s social and economic growth. In the course of our journey, we have encountered many challenges and overcome hurdles in operations and the overall business environment.

Kenya Power is a resilient business with a bright future given the exciting innovations being made in e-mobility, transmission, and distribution, and renewable energy technology particularly in the area of storage.

The Company is primarily purchasing green energy, which currently accounts for more than 92% of our total energy mix, making it one of the best ratios in the world.

Affordable storage will enhance our efficiencies which will, in turn, increase our reliability and result in more affordable power. As an organization, we are well-positioned to take a leadership role in these developments in order to improve customer satisfaction, and ensure the sustainability of our business,” the Chairman added.

Going forward, Kenya Power is planning to increase the uptake of the self-service platform, *977#, which with over 2 million registered users recorded over 19.6 million transactions in the period. The Company also intends to roll out a robust plan, anchored on partnerships, to drive the uptake of electric vehicles in the country.

The Company is also exploring the lit fiber business, in order to increase the penetration of internet connectivity across the country, particularly in rural areas. The Company’s extensive fiber network presently offers dark fiber services to the country’s major ISPs to facilitate the provision of internet services to the end buyer in the retail and enterprise segments across the country and neighboring countries.

The Chairman further said, “Looking into the future, our focus remains on transforming this strategically important Company into a pre-eminent local and regional organization by implementing a strong diversification agenda which will be underpinned by innovation and a high-performance culture. Our transformation strategy is aimed at sustainably growing the business by continuously empowering our people and streamlining our processes to make them more responsive to customer needs. To this end, significant focus will be placed on improving the accuracy of our billing system by investing in a more robust IT system and enhancing our internal processes. We will also run a cost-efficient operation which will provide value for money and best practice in supply chain management.”

In the immediate to medium terms, Kenya Power is undertaking deep-seated reforms aimed at driving down the cost of power to the end consumer in order to spur social and economic growth, make the business more efficient and agile, and the energy sector more sustainable.

“The Board recognized that a continued unbalanced approach towards power purchase agreements posed a systemic risk to the sector and the economy as a whole while exposing consumers to high electricity bills. In mitigation, it undertook a collective stakeholder approach to resolve these issues which resulted in the report of the Presidential Taskforce on the Review of Power Purchase Agreements which has made far-reaching recommendations which we have started implementing. We will continue to enhance business efficiency and step up dialogue on power purchase reforms in order to make electricity more affordable for our customers, and to boost Kenya’s competitiveness as a manufacturing hub to spur economic and social growth,” noted the Chairman.

“We would like to thank President H.E. Uhuru Kenyatta for his leadership and, the Cabinet sub-committee on KPLC led by the Cabinet Secretary for Interior and Coordination of National Government, Dr. Fred Matiangí, the National Treasury led by the Cabinet Secretary Hon. Ukur Yatani, the Ministry of Energy led by Dr. Monica Juma, shareholders, consumers, partners and staff for the support they have offered the business,” concluded the Chairman.