Kenya Power are in talks with the World Bank, National Treasury and Africa Development Bank to support the company and ease high debt obligation.
The firm wants the financers to buyout the short- term debt which is Sh.102.6 billion which the firm says that they are expensive and not sustainable in exchange for longer tenure ones.
The Kenya Power Managing Director acknowledged that they have a commercial debt of up to Sh.65 billion, charged an average interest of 4.5 per cent and a LIBOR of two per cent. The rest is shilling denominated one from local banks charged at 12 per cent per annum.
Energy Cabinet Secretary and Kenya Power management who were briefing the Senate Committee on Energy, were pushed to illustrate the true nature of the company’s loans, with some Senators suggesting that the power utility firm should be put under military administration just like the Kenya Meat Commission.
Senators at the committee said the interests charged are expensive and asked the management to look for a sustainable refinancing module.
Kenya Power’s net profit for the year ended in June dropped by a 91.9 per cent to Sh.262 million from Sh3.3 billion the previous year.
The net profit was attributed to increasing non-fuel power purchase costs which went up by Sh.18.1 billion to Sh.70.9 billion from Sh.52.8 billion in a similar period in 2018.
Gains were disintegrated by the costly purchases made on revenues from electricity sales which grew by Sh.16.9 billion to close at Sh.112.4 billion, from Sh.95.4 billion the previous year, a 17.8 per cent increase.
The Narok County Senator Ledama Olekina who was among the committee, said that it was painful to learn that the sole power utility is operating on an overdraft, despite charging consumers heavily.
The committee has called for a comprehensive forensic audit of Kenya Power’s books of accounts.