•The power utility firm had an asset base of Sh44.2 billion as of June 30, 2019.
•Energy PS Joseph Njoroge has however affirmed the government’s support for the troubled company, with initiatives in place including debt restructuring. Kenya Power technicians working on a power line/FILE The government has committed to support insolvent Kenya Power whose liabilities now exceeds its current assets by Sh70.9 billion, with the Auditor General casting doubt on its financial soundness.
The power utility firm has an asset base of Sh44.2 billion, for the year ended June 30, 2019, against a liability of Sh115.2 billion, a figure likely to have gone up, meaning the listed company is technically insolvent.
In her audit of the company, Auditor General Nancy Gathungu, who took office in July, notes Kenya Power has remained in a negative working capital position for the third consecutive year.
Though the board and management indicate they have been undertaking strategic initiatives to improve its financial position, the efforts have not yielded the intended results, the Auditor General notes.
“These conditions indicate that a material uncertainty exists, which may cast significant doubt on the company’s ability to continue as a going concern,” AG Gathungu notes in her opinion of the company.
The electricity distributor’s debt to its various independent power producers and suppliers was at a Sh47.9 billion by June.
This includes Sh23.7 billion owed to KenGen, Sh19.5 billion owed to Independent Power Producers(IPPs), and another Sh4.7 billion owed to Kenya Electricity Transmission Company (KETRACO).
Its profit for the year to June 2019 dipped 91.9 per cent to Sh262 million, from Sh3.3 billion the previous year, blamed on an increase in power purchase costs which went up by Sh18.1 billion to Sh70.9 billion, from Sh52.8 billion in a similar period in 2018.
Its commercial debt is to the tune of about Sh60 billion.
Energy PS Joseph Njoroge has however affirmed the government’s support for the troubled company,ruling out any possibilities of its nationalization, which is an option the government has considered in trying to salvage national carrier Kenya Airways.Njoroge on Friday told shareholders that the Energy Ministry is in talks with the National Treasury to cushion the firm through among others, debt restructuring and moratoriums, which will ease pressure on the company.“At the moment there is no intension by the government to nationalise Kenya Power. The government is making sure that there is a recovery process in force with a lot of initiatives to wade off […]