Kenya Power, the state-owned utility, has cleared a $22.7-million power purchase bill to the US geothermal energy tech firm, Ormat Technologies, to subdue fears of a default that would have seen the American firm bill the country’s National Treasury.
According to Business Daily, the money is part of a total pending bill of KSh2.92-billion ($25.52-million) owed to the Naivasha, Kenya-based geothermal power producer that was due to be paid by the end of December. The electric power distribution company still owes the firm KSh296.4 million ($2.6-million).
“As of December 31, 2021, the amount overdue from KPLC in Kenya was $25.5-million of which $22.9-million was paid in January and February of 2022,” revealed Ormat Technologies.
Although the payment from Kenya Power was 63 days late, Ormat said that it believes it will be able to collect all past due payments in the country.
“There has been deterioration in the collection from KPLC that became slower than in the past. The Company believes it will be able to collect all past due amounts in Kenya,” said Ormat.
The firm also disclosed that in the previous year to December 15.5 percent of its total electricity revenues came from Kenya.
“A substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guadeloupe, Guatemala, and other countries. Our operations in Kenya contributed disproportionately to gross profit and net income,” it said.
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, according to Business Daily.
A few weeks ago, Bloomberg reported that Kenya Power’s profit jumped after the country’s government and the company itself put more pressure on state-owned firms to recover unpaid electricity bills. This saw an increase in Kenya Power’s revenue — from 21% to Ksh83.6-billion ($731-million) in the six months through December, taking profit to Sh3.8 billion ($33.2-million) from Ksh138-million ($1.2-million) a year earlier.
National Treasury hinted in July 2021 that the distribution company is one of 18 struggling state-owned enterprises that need as much as Sh382-billion ($3.34-million) over five years to survive.
By Zintle Nkohla
Follow Zintle Nkohla on Twitter
Follow IT News Africa on Twitter