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Regulation | After “Significant Forex Losses,” Kenya’s Major Electric Utility Parastatal Receives Legal Approval to Accept Payments in Dollars

Kenya Power Company, whose recent performance has been negatively impacted by foreign exchange losses, has achieved a major victory with the regulator and government approving it to bill some of its customers in U.S. dollars.

Local reports state that the business is opening accounts for clients who are ready and able to pay their electrical bills in international currencies, such as US dollars, euros, and sterling pounds.

“The government and the regulator were quite involved in this, and we were able to obtain the required permissions. According to Kenya Power Finance Manager Stephen Vikiru, “We are in the process of opening collection accounts in a manner that is well interfaced with our systems.”

As finance costs more than quadrupled to KES 15.02 billion ($105.2 million) in the current financial year 2023/2024—a substantial increase from KES 7.39 billion ($51.7 million) in the previous year—the company is allegedly experiencing large forex losses.

The firm stated that the increase in unrealized foreign exchange losses on loan revaluations can be linked to the weakening of the Kenya shilling (KES) against major foreign currencies, which has resulted in the denominación of most loans in the loan portfolio.

The Kenyan Shilling (KES) has lost a great deal of value in relation to major world currencies during the past few years. For example, the value of the Shilling depreciated by 19.2 percent during the 2022–2023 financial year, ending at KES 140.6 versus the dollar at the opening of trade.

But in February 2024, the Shilling—which is now worth ~146 units for every dollar—saw some relief thanks to a EuroBond sale that turned it from one of the worst-performing African currencies this year to the strongest.

  • Against the Sterling Pound, the Kenyan Shilling depreciated by 23.9 percent during the period, dropping from KES 142 in July 2022 to KES 176 in June 2023.
  • Similarly, the Shilling experienced a 22 percent decline against The Euro and
  • A 10 percent decrease against the Chinese Yuan

Kenya electricity is reportedly one of the biggest purchasers of foreign money in the nation, despite complaints about a lack of dollars. The company has faced difficulties in obtaining foreign exchange to pay its debts to external creditors and electricity suppliers.

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