The National Treasury will get Sh1.3 billion in power producer Kenya Electricity Generating Company dividends in a year the government has struggled to collect taxes as a result of the coronavirus scourge and related economic downturn.
At the firm’s annual general meeting on Thursday last week, shareholders voted to increase the dividend per share to Sh0.3 for the year ending June 2020 up from 0.25 in 2019.
The government owns 70 per cent stake at KenGen while 30 per cent is held by private shareholders sharing the Sh1.9 billion paid out by the electricity producer.
Despite disruptions of the coronavirus pandemic, the company net profits jumped 133 per cent to Sh18.3 billion.
"Given this commendable performance in 2020 (considering the operating environment), the board of KenGen proposes a first and final dividend payment amounting to Sh0.30 per ordinary share of Sh2.50. In total, once approved by the shareholders, the company will pay out Sh1.98 billion in dividends," KenGen chief executive Rebecca Miano said.
Coronavirus pandemic
The Coronavirus pandemic has ravaged Kenya’s revenues. Tax collections in the eight-month period through February 2021 were Sh89.19 billion lower than the Sh995.38 billion collected in a similar period the year before.
Kenya Revenue Authority will now need to collect Sh661.44 billion more in four months through June to meet the full-year target of nearly Sh1.57 trillion — a target, which analysts at Genghis Capital forecast the taxman will underperform by about Sh208.3 billion.
Dividends from companies such as KenGen and Safaricom, which paid Treasury an interim dividend of Sh6.3 billion for its 35 per cent stake will be key in supplementing tax revenues.
KenGen profits came on the back of diversification of revenue streams, a large tax saving and cheaper electricity sales following completion of Olkaria V geothermal power plant.
The diversification strategy has seen the company incorporate new business lines in its revenue streams including consultancy services.Geothermal drilling servicesThe company is currently offering geothermal drilling services and undertaking geoscientific studies in Kenya and Ethiopia. It earned Sh440 million from its two drilling contracts in Ethiopia."Our focus going forward is on revenue diversification and overall business sustainability. Our geothermal-led diversification strategy will remain a priority. We believe this will lead us to greater economic gains," KenGen board chairman, General (Rtd) Samson Mwathethe said. KenGen recorded a 13.4 per cent growth in electricity revenue mainly attributed to the full onboarding of its 165 megawatts of Olkaria V geothermal power plant in November 2019 which […]