NAIROBI, Kenya – Auditor General Nancy Gathungu has warned that rising overdue payments owed to the Kenya Electricity Generating Company (KenGen) pose growing financial risks, with the power producer now setting aside Sh1.37 billion to cover potential defaults — the highest provision in recent years.
KenGen’s latest financial statements show that the impairment allowance for the year ended June 2025 rose sharply from Sh774.7 million a year earlier, reflecting mounting debts from its biggest customer, Kenya Power, and several non-commercial clients.
Kenya Power alone owed KenGen Sh16.65 billion as of June 2025, a balance that remained largely unsettled and forced the generator to increase its expected credit loss on the utility’s account by 78 percent to Sh830.99 million.
Non-commercial customers accounted for a further Sh545 million in provisions, up from Sh308 million last year.
Two companies — including one foreign client — were responsible for Sh890 million of the Sh1.27 billion owed by this group.
Weak contracts, slow payments
Auditor General Gathungu noted that most of the overdue receivables exceed KenGen’s 30–40 day credit window, with Kenya Power taking an average of 113 days to settle invoices.
“The extended outstanding receivables are attributed to weak contractual terms with clients, which do not sufficiently safeguard timely payment,” Gathungu said.
She cautioned that prolonged delays could tighten KenGen’s working capital, inflate bad-debt provisions, and hinder the company’s ability to fund operations and meet obligations as they fall due.
Risks to power supply and future investments
The audit concerns come at a time when Kenya is already grappling with power shortages.
President William Ruto recently acknowledged that the country’s current generation capacity — 2,316 megawatts, the highest in five years — is still insufficient to meet demand during peak hours.
“Between 5:00 pm and 10:00 pm, we have to do load-shedding… because our energy is insufficient,” the President said during a meeting with Kenyans in Doha.
He said Kenya needs Sh1.2 trillion to increase generation to 10,000 MW, citing the energy needs of major industrial users and large data centres that could consume nearly half of current output on their own.
The government’s investment plan includes expanding geothermal and hydro capacity, building 50 mega dams, rolling out large-scale irrigation, completing the first phase of Konza City, and reviving stalled projects — although some, like the Lamu coal plant, have been halted over environmental violations.
Energy experts warn that unless Kenya Power accelerates payments, KenGen could face growing liquidity pressure, potentially disrupting operations and future expansion projects — risks that could ultimately affect electricity supply stability and consumer tariffs.
