KenGen earns interest by investing loan funds

Companies

KenGen earns interest by investing loan funds


Ms. Rebecca Miano, Managing Director (MD) and Managing Director (CEO) of Kenya Electricity Generating Company (KenGen), March 18, 2021. PHOTO | JEFF ANGOTE | NMG

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Summary

  • The company said its financial income increased by 180 million shillings or 22% to 1.009 billion shillings in the six months to December 2021 thanks to the holding of higher bank deposits.
  • The company had also recorded a gain of 449 million shillings in finance income to 1.88 billion shillings in the year ended June 2021 based on the moratorium on loan repayments.
  • Revenue increased by 14% to 24.8 billion shillings, while costs increased by 8% to 14.13 billion shillings, due to increased business activities in Ethiopia.

KenGen #ticker: KEGN is earning substantial interest income from money it would have used to pay banks after the power producer won moratoriums on loan repayments following the Covid-19 pandemic. 19.

The company said its financial income increased by 180 million shillings or 22% to 1.009 billion shillings in the six months to December 2021, thanks to the holding of higher bank deposits that would otherwise have been swallowed up by repayments. of loans.

It also earned interest on cash held for ongoing projects, helping to protect its bottom line at a time when the end of Covid business tax incentives and capital cost allowances for its geothermal power plant at the Olkaria plant V has eaten away at his gross profits.

“Interest was earned on increased cash balances held for ongoing projects and loans rescheduled for repayment under the Covid-19 relief program by financial partners,” KenGen said in a statement. its update of the half-year results.

The company had also recorded a gain of 449 million shillings in finance income to 1.88 billion shillings in the year ended June 2021 based on the moratorium on loan repayments, which was introduced by the Bank. Bank of Kenya (CBK) in March 2020 to protect borrowers from financial distress after the Covid-19 pandemic hit the country.

The emergency measure ended in March 2021 as lenders restructured Sh1.7 trillion in loans, representing 57% of the banking sector’s gross lending.

KenGen was among the borrowers who continued to benefit from the looser repayment terms well beyond the end of the period the emergency measure was in place.

It also says it’s not just small businesses and individuals who have benefited from the moratorium on loan repayments, but also large corporations that hold billions in cash reserves.

KenGen also saw its financial charges fall by 27% or 334 million shillings to 897 million shillings during the six-month period, attributing it to a reduction in loan balances.

The company’s net profit for the period rose 1.3% to 5.12 billion shillings.

Revenue increased 14% to 24.8 billion shillings, while costs increased 8% to 14.13 billion shillings, due to increased business activities in Ethiopia, where the company has drilled geothermal wells for Ethiopia Electric Power (EEP).

The company also incurred higher steam costs, which increased by 8.3% or 127 million shillings to 1.65 billion shillings, due to increased shipments from geothermal power plants in Olkaria.

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