NAIROBI (Reuters) – Kenya Power Co said on Friday it will be much tougher on chasing unpaid bills after its provisions for bad debts surged in the financial year through June, sending its full-year profit down 60 percent.
Kenya’s main power distributor said it increased its bad debt provisions seven-fold to 6.08 billion shillings ($59 million) in the financial year that ended June 30 after it adopted a new accounting standard.
Its shares fell nearly 6 percent after its full-year results on Friday.
Its performance was also hurt by rising costs linked to its growing transmission and distribution network, and higher financing costs that offset modest electricity sales.
The state-controlled company will now make provisions for debts due for longer than 30 days, down from its previous practice of providing for debt that is due for longer than 58 days, said acting CEO Jared Othieno.
“We are going to engage in a more aggressive collection policy, where we are not only going to start collecting those which are due, but also internally,” Othieno told reporters.
“We are going to ensure that the moment we bill you, then we shall come for our debt.”
Kenya Power faced a crisis in July after its chief executive and several senior executives were arrested and charged with a conspiracy to commit economic crimes and abuse of office.
The company delayed the issuance of its financial results and issued a profit warning at the time.
“It had an impact… in trying to ensure that the succession plan that was in place was able to bring out the skills that were required,” said Othieno, adding the company had recovered from that phase. It has begun the search for a new CEO.
Its shares were down 5.6 percent at 3.40 shillings by 1129 GMT and have now lost 48 percent since the arrest of its CEO in July.
The company has more than 6.8 million customers connected to its grid, and says it gets about 60 percent of its revenue from industrial consumers in Nairobi and the neighbouring town of Thika.
($1 = 102.3000 Kenyan shillings)
Editing by Duncan Miriri and Susan Fenton