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Kenya Electricity Generating Company (KenGen) has posted a 9.2 per cent decrease in its half-year unaudited financial results for the period ending December 31, 2023.

The state-owned power generator reported that net profit was reduced to Sh2.9 billion from the Sh3.3 billion recorded in the previous period.

This decrease in profitability was due to a 16.4 per cent rise in operating and maintenance costs, influenced by global macroeconomic pressures, and a 25.7 per cent increase in tax expense, largely due to non-tax-deductible unrealized foreign exchange losses.

Depreciating shilling

The Nairobi Stocks Exchange (NSE) listed firm’s Chief executive officer Peter Njenga attributed the rise in operating expenses to an increase in the cost of plant operation and maintenance, which has been affected by the depreciating value of the shilling.

“The increase (in operating expense) is attributable to higher plant operating maintenance cost, impacted by depreciating shilling,” Njenga said.

Despite a 7.8 per cent growth in net revenue to Sh24.9 billion and an improvement in profit before tax, the increased operating expenses and tax expense outweighed the positive impacts, leading to a reduction in net profits.

The increased revenue was attributed to favourable rains that boosted hydro-generation by 7 per cent.

During the period under review, profit before tax increased by 1.8 per cent to Sh4.8 billion. Electricity units generated showed a modest improvement of 0.3 per cent per cent reaching 4,211GWhs, while the national electricity demand rose, peaking at 2,170.56MW on December 19, 2023.

Njenga noted that heavy rainfall during the period increased water levels in their hydro dams, boosting hydro-generation by 7 per cent, offsetting high fuel costs related to thermal generation, which decreased by 3.5 per cent.

Despite these challenges, the NSE listed firm is optimistic about the increasing demand for clean electric power in the nation.

The company is progressing with significant projects, including the refurbishment of the Olkaria I geothermal power plant and the Olkaria uprating project, which aims to increase the capacity of two geothermal power plants from 300MW to 340MW by December 2026.