Kenya Power, the country’s leading electricity distributor, announced a net loss of Sh3.19 billion for the fiscal year ending in June 2023. This marked a significant downturn from the Sh3.2 billion net profit recorded in the previous year.
The state-owned utility attributed this adverse performance to soaring finance costs caused by fluctuations in the exchange rate between the dollar and the shilling.
Despite facing a challenging macroeconomic environment characterized by a depreciating shilling and rising business expenses, Kenya Power’s revenue from electricity sales saw a notable growth of 21%, climbing from Sh157.3 billion to Sh190.9 billion.
This increase was primarily fueled by the expansion of their customer base. Operating expenses also saw a slight reduction, decreasing from Sh36.9 billion to Sh34.9 billion during the year.
However, the utility experienced a significant 89% surge in finance costs, escalating from Sh12.76 billion to Sh24.15 billion. This sharp rise was primarily driven by the depreciation of the Kenyan shilling against major international currencies.
The impact of this currency fluctuation on finance costs and power purchase expenses ultimately eroded the operational gains made during the year, leading to the reported net loss of Sh3.19 billion.
In response to these challenges, Kenya Power is actively engaged in restructuring its loan book to minimize its dollar-denominated loan obligations and mitigate the adverse effects of foreign exchange exposure on its operational performance.
As a result of the financial setback, Kenya Power announced that it would not be paying dividends for the fiscal year that concluded on June 30. This decision reflects the company’s strategic response to its current financial situation under new management.
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