The amount of money owed by Kenya Power (KPLC) to US energy firm Ormat Technology for electricity supplies, has hit Sh4.31 billion with the geothermal firm warning of financial exposure due to the deteriorating pace of payments by the State-owned utility.
Latest regulatory filings by the Naivasha-based geothermal power producer showed that KPLC owed it $62.8 million (Sh8.81billion) by December 31, 2023, but only paid $32.2 million (Sh4.5 billion) in January and February 2024 — leaving a balance of Sh4.31 billion.
The outstanding debt is a drastic jump from December 2023 when KPLC owed the US firm Sh1.6 billion.
“In the electricity segment, we are exposed to the credit and financial condition of KPLC which buys the power generated from our Olkaria III complex in Kenya. In 2023, KPLC accounted for 13.2 per cent of our total revenues,” said Ormat.
“There has been a deterioration in the collection from KPLC that became slower than in the past, and as of December 31, 2023, the amount overdue from KPLC in Kenya was $62.8 million (Sh8.81 billion) of which $32.2 million (Sh4.31 billion) was paid in January and February of 2024,” it said.
The US firm operates within the Naivasha-based Olkaria III complex through its wholly-owned subsidiary, OrPower 4, Inc, where it has an output capacity of 150 megawatts (MW) of geothermal power.
The company sells the electricity produced by its power plants in Olkaria to KPLC under a 20-year power purchase agreement (PPA) that ends between 2033 and 2036.
Ormat said its revenues from power sales in Kenya totalled Sh15.29 billion ($109.21 million) in 2023, a slight rise from Sh14.81 billion ($105.83 million) the previous year.
Kenya Power reported a net loss of Sh3.19 billion for the full year ended June 2023 following a sharp rise in financing costs on its hard currency obligations due to the weakening of the shilling in the forex market.
The performance of the Nairobi Securities Exchange-listed utility, however, rebounded in the six months ended December 2023 to post a Sh319 million net profit on increased electricity sales and an upward review of tariff, lifting it from the loss position.