Kenya Electricity Generating Company hit Kenya Power with a KSh364.6 million penalty in the year ended June 2023 for late payment of electricity supplied, marking the latest of such charges.
The power producer had charged the electricity distributor KSh847.9 million a year earlier. The late payments and attendant penalties have served to raise Kenya Power’s costs.
“Interest income from the Kenya Power and Lighting Company relates to interest penalties charged to Kenya Power due to late payments of invoices,” says KenGen in it’s latest annual report.
“Interest on late payments accrues after forty days after billing and Kenya Power acknowledging invoice or lapse of credit period.”
Kenya Power and KenGen are both majority-owned by the government, with the companies seen as strategic national assets in the energy sector.
KenGen’s transactions with Kenya Power, including electricity sales, stood at KSh55.5 billion in the review period. This was up from KSh47.7 billion a year earlier.
As of June 2023, Kenya Power was yet to pay KenGen about 40% of the value of the electricity it had purchased.
“Despite the increase in electricity revenue, trade receivables remained almost at the same level as in the prior year, increasing marginally by KSh855 million from KSh20.59 billion in 2022 to KSh21.44 billion,” said KenGen.
This indicates that Kenya Power has accelerated it’s payments to the power supplier compared to the prior year.
The persistent delays have, however, prompted KenGen to provide for part of the amounts claimed. It made an allowance for impairment of KSh866 million in the review period, down from KSh1.2 billion the year before.
Kenya Power buys a mix of hydro, thermal, wind and geothermal-generated electricity from KenGen and independent producers for onward sale to homes and businesses. KenGen then bills it every month for the power delivered.
KenGen currently sells its generated electric energy to a single off-taker, Kenya Power, and recognises this as a business risk.
“The company has one main customer — Kenya Power — however, limits are set to minimise the concentration of risk around Kenya Power and therefore mitigate financial loss through potential counterparty failure,” says KenGen in the section discussing it’s credit risk.
The power producer reported a 48.3% growth in net profit to KSh5 billion in the review period compared to a restated KSh3.3 billion a year earlier.
The performance was driven by growth in net sales, which increased to KSh45.8 billion from KSh37.7 billion.
