The profit before tax declined despite the recorded 12.61 percent growth in operating profit due to high finance costs which in 2012/2013 went up to Sh2.49 billion from Sh1.21 billion recorded in 2011/2012.
The power firm’s Chief Executive Officer Ben Chumo attributed the financing cost jump to additional medium and short term loans sourced to fund capital investments and supplement internally generated funds to bankroll network expansion and system reinforcement.
Electricity sales grew by 3.2 percent from 5.991 billion units the previous year to 6.184 billion units in the period under review. Fuel cost recoveries reduced by 24 percent from Sh41.896 billion the previous year to Sh31.771 billion during the year under review.
Chumo says the decline could also have occurred because of reduced generation of power from thermal plant and increased generation from hydro plants from 3,450GWh the previous year to 4,340GWh.
He said for the company to increase its revenue, it was going to work with the county governments in expanding customer connections.
“During this year under review we invested heavily in expanding our distribution system and accelerated customer connections by 252,527 bringing our total customer base to 2,330,962,” he said.
“This was in line with our stated plans at the beginning of the year to grow our customer base and increase electricity sales.”
Chuma said the company utilised medium-term funds from local banks to finance expansion in a bid to handle new generation capacity being developed by power producers and reinforce the network to serve the fast growing customer base.
“If you look at our network, you will see that we have effectively doubled the number of customer connections within the last five years from just over 1 million to 2.3 million,” he stated.
“This in turn requires capital investments to expand and strengthen the distribution system. We are confident that going forward these costs will translate into financial gains as our expanded system will allow for more connections while system losses are expected to come down.”
Consequently, transmission and distribution expenditure grew from 7.36 percent to Sh21.13 billion compared to Sh19.68 billion the previous period owing to a rise in depreciation charges amounting to Sh1.04 billion due to increased capital investment, and staff expenses.