Read the Kenya Electricity Generating Company Limited 2018 full year report

Kenya Electricity Generating Company Limited is listed on the Nairobi Securities Exchange under the share code KGEN. The company sells electricity it generates in Kenya for East-African regional consumption.

KenGen Limited experienced a 6% increase in energy sales up from 7,556 GWh even in the face of a relentless drought that constrained their production for a period up to 9 months until the downpour that raised dam levels breaking a 20 year record. Geothermal guaranteed a dependable energy supply given the electricity revenue’s increase to Kshs 17,112 million. Total revenue went up to Kshs 45,290 million marking a 4% rise as steam revenue soared to Kshs 6,222 million. In their next business year, KenGen Limited has set a delivery target of 165.4 MW from their already advanced geothermal project.

The following is an excerpt from KenGen Limited’s 2018 abridged report.

Performance Review

KenGen continued to demonstrate resilience despite a challenging operating environment, pointing to the fact that our strategic execution is strong enough to grow the business going forward. In the period under review, we maintained a good performance which enabled us to provide reliable, safe, quality and competitively priced electricity in line with our mandate.

During the year, our energy sales increased by 6% from 7,556 GWh in 2017 to 7,989 GWh despite a persistent drought which affected water levels in our reservoirs in the first three quarters of the year. However, heavy rains experienced in the last quarter of the year led to increased water inflows in our hydro dams with Masinga peaking at 1,057.75 meters above sea level, the highest in 20 years.

In addition, our strategic diversification with a focus on geothermal further ensured a reliable supply of energy, thus mitigating KenGen’s hydro generation deficit.

The total revenue increased by 4% from Kshs 43,432 million in the previous period to Kshs 45,290 million for the period ended 30 June 2018, driven by a 20% growth in steam revenue which increased from Kshs 5,189 million in 2017 to Kshs 6,222 million.

Electricity revenue from geothermal power plants increased by 6% from Kshs16,102 million in the previous year to Kshs17,112 million. This reflects the success of our strategy focused on Geothermal generation. Revenue net of reimbursable expenses increased by 4% from Kshs 34,452 million in year ending 30 June 2017 to Kshs 35,884 million for the period ended 30 June 2018. Profit before tax rose by 2% to Kshs 11,746 million compared to Kshs 11,461 million reported in the previous year. The improvement in profit before tax is mainly because of an increase in net finance income. The tax expense for the year was Kshs 3,855 million compared to Kshs 2,455 million for the previous year. The prior year’s tax expense was lower largely due to the effect of tax incentive (investment deduction) granted on commissioning of the new geothermal wellhead plants. Therefore, the profit after tax is Kshs 7,891 million compared to Kshs 9,006 million last year.

Future Outlook

We are glad to report that, though trade receivables from Kenya Power stood at Kshs 21,883 million as at 30 June 2018, at the time of releasing the results (post balance sheet), Kshs 18,573 million had been received thereby reducing the trade receivables to Kshs 3,310 million.

We are committed to maintaining investor and shareholder confidence in our business growth through capital-intensive investments in power generation projects. As is evident in our results, we continue to register positive operating cash results despite large investments in capacity expansion that is focused on geothermal. It is through such investments targeting supply of the country’s base load requirements that are focused on reinforcing the foundation for future steady revenues and earnings to shareholders.

In line with our current revamped Horizon II strategy, we intend to increase our generation capacity on a planned and continuous basis in sync with market requirements. In the coming year, we are committed to deliver 165.4 MW Olkaria V geothermal project whose implementation is currently at an advanced stage. The implementation of 83.3 MW Olkaria I Unit 6 geothermal project has commenced with planned commissioning in early 2021. The balance of the project pipeline drawn from wind, solar and geothermal sources for a total 476 5 MW are at various stages of preparation for implementation in line with the country’s updated Least Cost Power Development Plan (2017-2037).