Kenya Power has become the second company to blame the depreciating shilling against the dollar for their woes. This comes after an audit report for the 2022/23 financial year ending in June released by the firm Board of Directors.
The firm has reported a Sh3.2 billion net loss this financial year as compared to last year’s 3.2 billion net profit. This is a deficit that the company has blamed to the shilling. It is said that high finance costs as a result of the fluctuations in the exchange rate between the dollar and the shilling caused the dip.
“In the period, the Kenya Shilling depreciated by 19% from KShs.118 per USD in June 2022 to KShs.140 per USD in June 2023. The impact of the currency fluctuation as reflected in the finance costs and cost of power purchase eroded the operational gains recorded during the year, resulting in a net loss of KShs. 3.2 Billion.”
The company has said that the company’s loan obligation is the reason they are overstretching due to how the shilling is performing against foreign currencies.
“To mitigate the impact of forex exposure on operational performance, the Company is working on restructuring its loan book to minimise the loan obligation that is dollar-denominated. Part of this process involves the transfer of some transmission assets to the Kenya Electricity Transmission Company (KETRACO) to offset the government on-lent loans.”
However, the company is seeking to increase electricity demands in the country and create new ideas to increase revenue. Ideas like electric vehicle implementation will create a huge demand thus increasing revenue. This is according to CEO Joseph Siror.
“The Company is implementing strategic initiatives to drive the adoption of electric motorisation. The gains from these initiatives will complement other revenue growth and diversification strategies already in place, including implementing the Time-of-Use tariff to encourage energy consumption during off-peak periods and the fibre leasing business.”
The CEO however confirmed that the basic fundamentals remained stable despite the shilling challenges that in turn increased the business cost.
Earlier this week, Kenya Airways projected a loss in the 2023 financial year of up to 62.5 Billion. A situation the CEO blamed on the depreciating shilling against the dollar. This has affected the company through settling the loans tharare dollar bound. The company was asking for government intervention for a boost to keep the company afloat.
Related: