Kenya Power cut interest charges on late payments to suppliers by nearly a quarter to Sh290.3 million in the year ended June 2026, helped by an improvement in its working capital position, which shows surplus funds after deducting short-term debt.
The electricity distributor incurred Sh382.7 million in late-payment penalties in the previous year, meaning the charges fell by 24.1 percent, in the period under review.
The reduction came as the utility firm made progress in clearing overdue obligations and strengthening its liquidity position, with working capital improving to Sh1.9 billion in June 2026 from a deficit of Sh19.21 billion in June 2025.
“A particularly significant milestone was the turnaround in our working capital position,” Kenya Power said in its 2026 annual report.
“The working capital improved to Sh1.9 billion, reflecting continued progress in liquidity management and financial sustainability initiatives.”
The improvement marks a reversal from the prolonged working capital pressures that had increased the cost of settling invoices from power producers and other suppliers.
For instance, Kenya Electricity Generating Company (KenGen), Kenya Power’s main supplier, charges interest when the utility firm fails to settle an invoice within 40 days of billing and acknowledgement, or upon expiry of the agreed credit period.
Over the past 10 years, Kenya Power has paid Sh6.51 billion as interest on late penalties. In the year ended June 2025, it paid Sh382.7 million in interest on late invoices, down from Sh981.8 million in 2024. The charges had peaked at Sh1.12 billion in 2023.
The company attributed the previous accumulation of overdue obligations to its persistent negative working capital position, which forced it to enter into payment plans with counterparties.
In the 2025 annual report, Kenya Power said it had paid over Sh24 billion above the annual invoice total during that year as part of efforts to reduce overdue amounts that attracted penalty charges.
The payments included Sh5.2 billion to KenGen, Sh18.3 billion to independent power producers and Sh900 million to Kenya Electricity Transmission Company (Ketraco).
The company said settling all outstanding obligations within the agreed credit period in 2025 would have required additional borrowing, with the resulting financing cost being higher than the interest charges on delayed payments.
Kenya Power also cited foreign currency shortages as a factor that had increased its outstanding obligations, especially in 2022 and 2023 when the market suffered dollar shortages. A significant portion of the utility firm’s power purchases are denominated in foreign currency.
The improvement in cash position in the latest year reflects management’s efforts to strengthen the company’s position through tighter working capital management and optimisation of its debt portfolio.
Kenya Power said total assets stood at Sh421.49 billion at the end of June 2026, while total borrowings amounted to Sh79.82 billion, down from Sh87.64 billion.
