Kenya Power & Lighting Company (KPLC) has announced an after-tax loss of Sh1.14 billion for the six months ending December 31, 2022.
The company cited increased foreign exchange losses and the implementation of a 15% reduction in end-user electricity tariffs, as recommended by the government in January 2022, as the reasons behind the loss. The tariff reduction led to a 4.4% decline in electricity sales.
In a statement, the company said, “As a result of the tariff reduction, the basic electricity revenue for the six-month period decreased by Sh6,696 million.” The period also saw a decrease in profit before tax, which dropped from Sh5.7 billion in the same period the previous year to Sh1.6 billion.
The growth in electricity sales of 4,764 GWh during the review period was mainly due to increased economic activities and an expanded customer base, which led to growing energy demand. However, operating costs increased from Sh19 billion to Sh21.7 billion due to increased foreign exchange losses arising from the revaluation of outstanding payments to power generators denominated in foreign currencies due to the depreciation of the shilling.
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Non-fuel power purchase costs increased from Sh40.5 billion to Sh43.9 billion owing to additional electricity purchases made during the period to support growth in demand. Similarly, fuel costs increased from Sh10.9 billion in the previous period to Sh15.1 billion attributable to a significant increase in fuel prices during the review period.
The company also saw finance costs increase from Sh6.8 billion to Sh7.4 billion due to a rise in unrealized foreign exchange loss arising from the revaluation of foreign-denominated loans due to the depreciation of the shilling against major currencies.
The company stated that it is implementing cost-saving measures to mitigate the effects of the tariff reduction and currency fluctuations. The measures include reducing capital expenditure and optimizing operations to enhance efficiency.
KPLC’s financial performance is closely monitored by investors, as it is a leading utility company in East Africa, with a customer base of over 7 million. The company is responsible for the transmission, distribution, and retail of electricity in the country and is majority-owned by the Kenyan government. The government’s energy policies have a significant impact on the company’s financial performance.