Kenya Power, the country’s primary electricity distributor, has reported a significant increase in profits for the period ending December 2024, driven by higher revenue and improved operational efficiency, according to the latest Kenya Power financial report.
Kenya Power financial report indicates that revenue from contracts with customers stood at Ksh 113.55 billion, marking an increase from Ksh 107.43 billion in the previous period. This growth was largely attributed to higher electricity sales and tariff adjustments.
During the period, electricity sales increased by 5% to 5,506 GWh compared to 5,225 GWh recorded during a similar period in the previous financial year. Despite the growth in electricity sales, power purchase costs reduced by KSh.11.65 billion, riding on the strengthening of the Kenya Shilling against major foreign currencies in which the majority of Power Purchase Agreements are denominated.
Despite the rising revenue, Kenya Power faced increased costs, with the cost of sales climbing to Ksh 83.03 billion, up from Ksh 71.38 billion. However, the gross margin improved to Ksh 30.52 billion from Ksh 36.05 billion, reflecting better cost management and enhanced operational efficiency.
“The increase in electricity unit sales was driven by higher consumption as a result of improved network reliability, connection of new customers, and improved outage resolution timelines supported by the availability of critical materials including meters and transformers,” said Kenya Power’s Managing Director & CEO, Dr. (Eng.) Joseph Siror.
According to Kenya Power financial report, operating profit rose to Ksh 14.45 billion compared to Ksh 15.68 billion in the prior period. Interest income was recorded at Ksh 361 million, while finance costs amounted to Ksh 4.97 billion. Finance costs reduced by KSh.13 billion to KSh.1.97 billion in December 2024 from KSh.15 billion in December 2023.
The reduction is attributed to the strengthening of the Kenyan Shilling against major foreign currencies, which account for 90% of the Company’s loan portfolio. This was further supported by a reduction in loan balance due to continued repayment.
Despite a significant reduction in finance costs as well as power purchase costs, the Company recorded a KSh.4 billion increase in operating expenses, mainly arising from depreciation and maintenance costs to support the expanded network. However, the working capital improved by 30% from negative KSh.27.44 billion in June 2024 to negative KSh.18.99 billion in December 2024.
The company reported a profit before tax of Ksh 14.07 billion, a significant surge compared to Ksh 538 million in the previous period. After accounting for income tax, the net profit stood at Ksh 9.97 billion, up from just Ksh 319 million, reflecting a strong turnaround in financial performance.
Kenya Power also showed resilience in cash flow management. Cash generated from operating activities reached Ksh 11.65 billion, while net cash used in investing activities was Ksh 9.13 billion. Financing activities saw an outflow of Ksh 5.83 billion, reflecting the company’s efforts to reduce its debt burden.
In terms of assets, Kenya Power reported a stable financial position, with property and equipment forming a significant portion of its total assets. Shareholders’ equity remained robust despite the challenging economic conditions.
The company credited its improved performance to several operational efficiencies, including enhanced grid management, reduction in system losses, and improved revenue collection mechanisms. Additionally, Kenya Power has been investing in infrastructure upgrades to improve electricity distribution across the country.
The company also highlighted its ongoing transition towards renewable energy sources, aligning with Kenya’s national goal of achieving a more sustainable and environmentally friendly energy sector.
In the period between 1922 to date, Kenya Power has extended its transmission and distribution network across the country, covering over 320,762 kilometres. As of June 2024, the Company had over 9.6 million accounts and had enabled nearly 80% of the country’s population to access the national grid.
Looking ahead, Kenya Power remains optimistic about its financial prospects. The company plans to continue implementing measures to enhance efficiency, reduce losses, and expand its customer base. However, challenges such as fluctuating fuel prices, regulatory changes, and foreign exchange volatility could impact future performance.
“At the core of our strategy is a commitment to powering people for better lives while maintaining a sharp focus on operational excellence. Looking ahead, we are committed to sustaining our improved financial performance through targeted initiatives that enhance efficiency and diversify revenue streams to drive long-term growth,” said Dr. (Eng.) Siror.
As part of its revenue diversification plan, the Company has commenced implementation of the Government’s Digital Superhighway project which involves rolling out last-mile fibre optic cable connectivity to approximately 6,000 government institutions nationwide.
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