US raises alarm over KSh1.6bn Kenya Power debt
3 min read
US firm (energy firm Ormat Technology ) raises concern over KSh1.6bn Kenya Power debt
US firm (energy firm Ormat Technology ) raises concern over KSh1.6bn Kenya Power debt.
The Kenya Power and Lighting Company (KPLC) owes US energy company Ormat Technology roughly Sh1.6 billion ($11.8 million), which has caused the company anxiety over dwindling payments for products it has provided to the Kenyan utility.
The geothermal energy generator with headquarters in Naivasha claimed that KPLC owed it Sh3.67 billion ($ 27 million) by the end of December but had only made payments worth Sh2.06 billion ($ 15.2 million) in January and February.
“In the electricity segment, we are exposed to the credit and financial condition of KPLC that buys the power generated from our Olkaria III complex in Kenya,” Ormat said.
“In 2022, KPLC accounted for 14.4 percent of our total revenues. There has been a deterioration in the collection from KPLC that became slower than in the past, and as of December 31, 2022, the amount overdue from KPLC in Kenya was $27million(Sh3.67billion) of which $15.2million(Sh2.06billion) was paid in January and February of 2023” it further said in a disclosure.
The payments in February and March mean that KPLC still owes Sh1.6 billion (411.8 million) with the US firm warning that any change in utility firm’s financial condition may adversely affect it.
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Kenya Power sunk into a Sh1.1 billion net loss for the half year that ended December—a development it blamed on the weak shilling and the 15 percent electricity tariff cut that was effected in January last year as a State directive.
Financial results showed KPLC’s performance dipped from the Sh3.82 billion net profit that had been posted in the preceding similar period.
“This drop is attributable to increased foreign exchange losses, and the implementation of the 15 percent reduction of the end user electricity tariff as recommended by the Government in January 2022,” Kenya Power said, noting that the tariff reduction saw the basic electricity revenue drop by Sh6.69 billion.
Ormat said its total revenues from power sales in Kenya totaled Sh14.39 billion in 2022, a slight rise from Sh13.98 billion the previous year.
The company sells the electricity produced by the power plants in Naivasha to Kenya Power under a 20-year PPA ending between 2033 and 2036.
The US firm operates within the Naivasha-based Olkaria III complex through its wholly-owned subsidiary, OrPower 4, Inc., where it has an output capacity of 150 megawatts(MW)of geothermal power.
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