Kenya Power Ends Debt Relief, Declares First Dividend in 6 Years

Kenya Power reports first dividend in 6 years post-debt relief, driven by profit growth, cost cuts, and a renewed focus on financial stability.

By Charles Wachira

Kenya Power and Lighting Company (KPLC), the primary electricity distributor in Kenya, October 30 announced its first dividend in six years, signaling a strong financial turnaround. This milestone comes on the back of successful cost-cutting and debt-reduction efforts, allowing the company to re-establish investor confidence and position itself for sustainable growth.

Debt Relief Phase-Out

In the past decade, KPLC has been weighed down by debt, with obligations to both local and international lenders. In 2018, the company secured a government-backed debt relief package aimed at stabilizing its finances and averting operational challenges. This support allowed Kenya Power to focus on restructuring, but with growing national debt concerns, the government phased out debt relief last year, pushing KPLC to pursue independent financial viability.

Speaking on the transition, KPLC CEO Eng. Joseph Siror said, “The end of debt relief has forced us to operate more efficiently, which has ultimately been beneficial. We’ve reduced wasteful expenditure, improved our revenue collection, and strategically restructured our debt. We’re proud to declare a dividend after years of financial difficulty, which is a testament to the success of our turnaround plan.”

Positive Financial Results

Kenya Power’s improved financial position is reflected in its 2023 fiscal results, with the company recording a net profit of KSh 7 billion, a 34% increase from the previous year. Revenue growth has been driven by a combination of increased customer connections, tariff adjustments, and a crackdown on electricity theft, resulting in higher collections. The company also slashed operational costs by 20%, contributing to a healthier cash flow.

Kenya’s Treasury Cabinet Secretary, John Mbandi, praised the achievement, saying, “Kenya Power’s return to profitability is not only a win for its shareholders but for all Kenyans who rely on a stable and efficient power supply. The company’s improved finances mean it can now reinvest in infrastructure to support the nation’s development goals.”

Dividend for Shareholders

Kenya Power announced a dividend of KSh 0.30 per share, the first payout since 2017. This move is a welcome relief for shareholders who have been patient through the company’s recovery period. “Our investors have been incredibly supportive throughout our journey,” Siror said. “We’re pleased to reward them for their trust and commitment to Kenya Power’s mission.”

Outlook and Challenges

Despite these positive results, Kenya Power faces ongoing challenges, including rising operational costs and pressure to shift to renewable energy sources. The company has already initiated steps toward diversifying its energy portfolio, aiming to increase the share of green energy in its mix to 75% by 2030.

“Transitioning to cleaner energy is critical for Kenya’s future,” said Energy Principal Secretary Alex Wachira. “We’re encouraged by Kenya Power’s efforts to modernize its infrastructure and integrate more renewables. However, achieving this goal will require continued financial discipline and government support.”

For KPLC, paying dividends is a mark of recovery and a signal that Kenya Power is ready to play a larger role in supporting Kenya’s economic growth.

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