Kenya power is technically insolvent even as its liabilities exceed the the assets.
As of June 30, 2019, Kenya Power had an asset base of Ksh44.2 billion as compared to liabilities worth Ksh115.2 billion according to the auditor general Nancy Gathungu.
This means Kenya Power is operating on a deficit of over Ksh71 billion.
According to Ms Gathungu, Kenya Power has remained in a negative working capital position for the third consecutive year.
“These conditions indicate that a material uncertainty exists, which may cast significant doubt on the company’s ability to continue as a going concern,” opines Ms Gathungu.
Among the liabilities is a Ksh47.9 billion debt owed to electricity suppliers like KenGen and other creditors.
Kenya Power Owes Ksh23.7 billion to KenGen, Ksh19.5 billion to Independent Power Producers(IPPs), and another Ksh4.7 billion owed to Kenya Electricity Transmission Company (KETRACO).
The government plans to ease the pressure on Kenya Power through debt restructuring and moratoriums, according to Energy PS Joseph Njoroge.
“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 insolvency,” Njoroge told shareholders during the 98th(Virtual) Annual General Meeting.
“From the figures that have been shown, there is that fear (of insolvency) but I want to confirm that the various initiatives, including debt restructuring, should give a lot of relief to Kenya Power.”
The sole power distributor will have a one-year moratorium on its 18 foreign commercial and government guaranteed loans from lenders such as China Exim Bank, Japan Development Bank and World Bank’s International Development Agency (IDA).
Kenya Power has reported an unaudited net loss of Ksh2.98 billion in the financial year ended June 2020, as compared to a net profit of Ksh262 million it posted in the year to June in 2019.
The company reported revenues of Ksh133.18 billion, an 18.45 per cent growth compared to Ksh112.43 billion generated in the year ended June 2019.