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Kengen Leaps to Second Most Profitable Kenyan Company on Higher Sales, Tax Credits

GBR Team 28/01/2021

Listed Kenyan power generator Kengen said net profit surged 133 percent to Sh18.4billion (US$170m) for the full-year ended 30 Jun 2020 boosted by tax reliefs claimed on the newly-commissioned Ol Karia V power plant, and Covid-19 corporate tax reductions by government.

It will return Sh1.978bn (US$17m) to shareholders as dividends with the Government of Kenya taking Sh1.38bn of that from its 70 percent shareholding.

Private investors in the Nairobi Securities Exchange listed firm will share out Sh593m (US$5.3m)

Kengen also reported increased revenues of Sh40bn ($363m) up from Sh35bn ($317m) the previous year boosted by energy sales from the new power plant and from geothermal drilling operations it has been carrying out in Ethiopia.

But it is the tax relief it received from the commissioning of the 165Megawatts Ol Karia V power plant that saw net earnings surge.

This break is however set to end and new power plants that come up will not receive the relief from the Government of Kenya in the future.

This is after the Government reversed various tax exemptions and investment deductions specific to the energy sector last year.

Ol Karia V was constructed at a cost of US$669m (Sh73bn) with Japanese financing and has two units producing 82.5Mw each making it the Africa’ s largest geothermal power plant.

Kengen is looking to execute another power plant, Ol Karia VI with a consortium of companies in a joint-venture in which it will hold a 25 percent stake.

The 18.4bn profit places Kengen second after telco Safaricom in reported profits although this could change when the big banks especially Equity Banking group reports its full-year results in March. Equity’s 9-month results stood at about Sh17.5bn for the period ended 30 September 2020.

The nation’s biggest bank, KCB Group has yet to report the full-year impact of absorbing struggling National Bank of Kenya last year among other exceptional items and is unlikely to match Kengen.