Kenya Power and Lighting Company (KPLC) has declared an interim Dividend Payout for the first time in 9 years, after it posted a record-breaking profit increase in the six months ending December 2024.
Driven by reduced finance costs, increased electricity sales, and lower costs of sales, the company, reported a 3025.4 Percent profit increase.
This remarkable performance has prompted the company to declare an interim dividend of KSh 0.20 per share, marking the first dividend payout in nine years.
The utility company reported a net profit of KSh 9.97 billion, a substantial jump from the KSh 319 million recorded in a similar period in 2023.
The company attributes this surge in profitability to various factors, including improved revenue collection, cost-cutting measures, the strengthening of the Kenya Shilling against major global currencies, and an optimized power generation mix.
Kenya Power recorded a 5% increase in electricity unit sales, rising from 5,225 GWh in 2023 to 5,506 GWh in 2024. This growth is attributed to:
1. Higher electricity consumption across households, industries, and businesses as economic activity picked up post-pandemic.
2. An improved distribution network, leading to better power reliability.
3. New customer connections, facilitated by the availability of essential materials such as meters and transformers.
Despite the rise in unit sales, the company saw a 5.4% decline in electricity revenue, dropping to KSh 107.4 billion from KSh 113.6 billion in December 2023. This was due to a reduction in tariffs, a move that sought to ease the cost burden on consumers but impacted revenue generation.
Another major factor contributing to Kenya Power’s profitability was the sharp decline in finance costs, which fell by KSh 13.1 billion, from KSh 15.0 billion in December 2023 to KSh 1.9 billion in December 2024.
This reduction was largely driven by:
1. The strengthening of the Kenya Shilling, which significantly reduced foreign exchange losses.
2. Loan repayments, reducing the company’s debt burden.
3. Lower interest expenses on foreign-denominated loans.
Kenya Power holds about 90% of its loan portfolio in foreign currencies, particularly the US Dollar and the Euro.
The appreciation of the shilling helped the company mitigate the adverse effects of currency fluctuations, making debt servicing more manageable.
In the same period, Kenya Power resumed repayments of Government of Kenya (GoK) on-lent loans, which had been under a repayment moratorium since March 2020.
This move reflects the company’s improved financial position and commitment to reducing its debt obligations.
Another key driver of Kenya Power’s improved financial performance was the decline in power purchase costs, which dropped by KSh 1.7 billion to KSh 71.4 billion.
The decline was mainly due to:
1. A stronger Kenya Shilling, reducing the cost of power purchase agreements, most of which are foreign currency denominated.
2. An optimized power generation mix, ensuring more efficient and cost-effective electricity production.
3. Lower reliance on expensive thermal power generation, as the country ramped up renewable energy production, particularly from hydro, wind, and solar sources.
Kenya Power has been actively shifting towards renewable energy to lower electricity costs and reduce dependency on costly thermal power generation.
The government’s investment in renewable energy projects has significantly contributed to these efforts, helping the utility firm manage costs more effectively.
Despite the stellar profit growth, Kenya Power reported a KSh 4 billion increase in operating expenses, bringing total operating costs to KSh 23.7 billion.
The rise was attributed to:
1. Higher staff costs, following salary adjustments and hiring to support the company’s expansion efforts.
2. Increased depreciation costs, reflecting ongoing infrastructure investments.
3. Maintenance and operational improvements, aimed at ensuring better service delivery and minimizing power outages.
On the positive side, Kenya Power’s working capital position improved by 30%, reducing from a negative KSh 27.4 billion in June 2024 to negative KSh 18.9 billion in December 2024.
This improvement indicates the company’s enhanced liquidity position and better financial management.
Dividend Payout and Share Price Surge.
For the first time in nine years, Kenya Power declared an interim dividend of KSh 0.20 per share, set to be paid on or about April 11, 2025, with a book closure date of February 8, 2025. The dividend payout signals renewed investor confidence in the company’s long-term stability and profitability.
Following the announcement of its impressive half-year results, Kenya Power’s stock surged 454.3% in a year, trading at KSh 7.76 per share as of today’s morning session.
The company’s remarkable stock performance underscores growing investor optimism and the potential for continued financial growth.
Kenya Power’s Future Outlook and Expansion Plans.
1. Transition to Renewable Energy and Sustainability Initiatives.
Kenya Power is actively working towards increasing its reliance on renewable energy sources, reducing dependency on expensive thermal power generation. Key areas of focus include:
Expanding solar and wind energy projects, leveraging Kenya’s abundant renewable energy resources.
Investing in energy storage solutions, such as battery storage systems, to enhance grid reliability.
Upgrading transmission and distribution infrastructure, ensuring more efficient power delivery to consumers.
2. Strengthening Smart Grid and Digital Transformation Efforts.
The company has been investing in smart grid technologies to improve efficiency and service delivery. Some key initiatives include:
Implementation of smart meters, reducing electricity theft and improving billing accuracy.
Automated outage management systems, enabling faster detection and resolution of power outages.
Digital payment platforms, allowing customers to make bill payments more conveniently.
These initiatives align with Kenya’s broader Vision 2030 agenda, which aims to modernize infrastructure and promote a more sustainable and digitally-driven economy.
3. Expanding Electricity Access in Rural Areas.
Kenya Power is working closely with the government to expand rural electrification, ensuring more households and businesses gain access to electricity.
The Last Mile Connectivity Project, funded by development partners, has played a crucial role in this effort by subsidizing connection costs for low-income communities.
With ongoing grid expansion projects, the company aims to connect at least 200,000 new customers annually, fostering economic growth and improving livelihoods across the country.
Kenya Power’s record-breaking 3025% profit surge marks a remarkable turnaround for the company, driven by strategic financial management, increased electricity sales, and lower power purchase costs.
The interim dividend declaration after nine years and the stock price surge reflect growing investor confidence in the utility firm’s long-term potential.
As Kenya Power continues to expand its renewable energy portfolio, invest in smart grid technology, and improve financial sustainability, it is well-positioned for long-term growth and profitability.
The company’s ongoing efforts to enhance efficiency, reduce costs, and increase customer connections will play a crucial role in ensuring stable and affordable electricity for Kenya’s growing economy.