Kenya Electricity Generating Company #ticker:KEGN (KenGen) net profit for the half-year period ended December 2020 fell 38.13 percent on the back of lower earnings from thermal power generation and absence of tax savings.
KenGen, which is 70 percent owned by the State, announced on Thursday profit dropped to Sh5.06 billion from Sh8.17 billion a year earlier.
On the other hand, Kenya Power — the biggest buyer of electricity from KenGen — reported a drop of 80.06 percent in profit for the same period to Sh138 million, citing depressed demand for power amid Covid-19 knocks on economic activity.
Earnings from electricity sales amounted to Sh69.01 billion in the period, the near-monopoly power distributor said, a marginal 0.85 percent drop compared with June-December 2019 period.
“Electricity sales grew marginally by 0.7 percent from 4,167 GWh recorded in a similar period in 2019 to 4,196GWh in the period under review. The curtailed growth is attributed to the slow recovery of electricity demand following a sharp decline in energy consumption at the onset of the Covid-19 pandemic,” Kenya Power, 50.09 percent owned by the State, said in a statement.
KenGen, on the other hand, said profits were hurt after cash reimbursed from expenses arising from fuel and water costs fell 64.2 percent to Sh1.23 billion. The fall was largely as a result of continued displacement of thermal power by increased generation of geothermal and hydro-electric electricity.
Earnings from power generated from costly diesel-run generators plunged by nearly half, falling 49.42 percent to Sh2.74 billion.
KenGen’s profit were further hit by a tax charge of Sh1.82 billion as opposed to a credit of Sh1.89 billion a year earlier which was a result of investment deduction following the completion of the 165 megawatts (MW)-Olkaria V geothermal project in November 2019.
Revenue from geothermal wells, on the other hand, increased 14.46 to nearly Sh14.06 billion largely spurred by increased generation from Olkaria V plant, while sales from hydro-electric sources rose 7.44 percent to Sh4.81 billion.
“Revenue from geothermal operations continued on growth trajectory and increased by 14 percent supported by additional generation capacity from Olkaria V and revenue diversification from the Ethiopia project,” KenGen said in a statement.
“Other income decreased by 62 percent attributable to impact of Covid-19 on consultancy, Geothermal Spa as well as carbon credit which brought in Sh34 million in the last financial year. ”