Shareholders of the Kenya Electricity Generation Company (KenGen) have expressed concerns to the Board of Directors over the ability by the Kenya Power to pay up Kes 19.6 billion the utility firm owes to Kengen.
According to KenGen’s full year results for the period ending 30the June 2019, its largest customer, Kenya Power owes it 19.4 billion which is due for electricity sales and another Kes 200 million in sales of assets.
Shareholder are now worried that the cash-strapped power distributor is unlikely to pay the outstanding bill due to its current financial position and could cost them dividends in the long run.
As per the audited financial results, Kenya Power total liabilities amount to Kes 115.19 billion compared to an asset base of Kes 44.22 billion as at June 30th 2019.
However, Energy Principal Secretary Dr. Joseph Njoroge alluded to expected aggressive push to recover accumulated power bills owed to the firm by various state agencies.
“In recent months there have been a periodic payment plan between KPLC and KenGen and its going on well. Personal I have been involved in ensuring that those debts that are owed by customers and various government agencies are also paid so that in return KPLC can also pay their creditors. Efforts to pay those debt are in place and its not left to KPLC alone,” said PS Njoroge.
This comes as the Auditor General Nancy Gathungu cast doubt on the future of Kenya Power, given that measures to ease rising liabilities have not worked.
“The company has remained in a negative working capital position for the third consecutive year. As disclosed by the board and management, in the past and current financial statements, strategic initiatives have been undertaken to improve the financial results of the company. However, these initiatives appear not to have yielded the intended results. These conditions indicate material uncertainty exists which may cast significant doubt on the company’s ability to continue as a going concern,” said Gathungu in her statement.
In the second quarter of the year following the COVID-19 outbreak, power demand shrunk 15% and this is further expected to dent Kenya Power revenues with some customers also expected to default on payments.
In the period under review, KenGen recorded a 1.5% revenue growth which rose to Kes 45.97 billion shillings compared to Kes 45.29 billion in 2018.
Profit after tax dropped marginally from Kes 7.89 billion to Kes 7.88 billion.
“The performance was largely on the backdrop of enhanced geothermal energy sales that significantly offset depressed hydro generation, especially in the first half of the year when the country experienced persistent drought, as well as a Kes 2.02 billion increase in finance costs to Kes 5.05 billion,” said CEO Rebecca Miano.
During the AGM shareholder approved a final dividend payout of Kes 0.25 for every ordinary share of Kes 2.50 translating to Kes 1.65 billion.
The virtual AGM was also the last to be chaired by Joshua Sang who retires on rotation after 7 years at the helm. Another director who leaves the firm is Ziporah Ndegwa who retires on rotation.