Kenyan taxman wants to switch off lights for KenGen over billions in tax arrears

Electricity producer Kenya Electricity Generating Company (KenGen) is racing against time to have its lights on by getting a waiver from Kenya Revenue Authority (KRA) who is demanding Sh2.43 billion tax as well as penalties and interest.

The Nairobi Securities Exchange-listed firm is currently locked in talks with KRA which started a year ago negotiating for a waiver of penalty and interest.

KenGen’s Finance and ICT director John Mudany said if the company secures the waiver from the taxman it would allocate the undisclosed funds to its ongoing capital intensive projects.

“We are still in discussions. We are hopeful they will look at it with favour,” Mr Mudany said.

“If we are forgiven, we will invest the money into putting up more power plants and achieving the governments own vision of cheap energy. The money can do a lot.”

A Chinese company recently won rights to explore and build geothermal power plants in Kenya, going a few miles in increasing the country's power output from the current capacity of 630 megawatts.

KenGen attracted the compensation tax which largely arises when dividends are paid out of untaxed profits or reserves, after the state owned firm paid dividend arrears to the Treasury last year.

KenGen paid dividend of Sh6.164 billion, according to an audit report by the Auditor General on the company for the year ended June 2017.

The Company hopes its lucky strike would continue as it has benefited from massive investment deductions on its capital projects in recent years.

The Auditor- General stated in his report on KenGen that KRA which had earlier issued a demand letter for the payment of the principal amount of the tax, interest and accruing penalties, had dug in on its position over the payment.

“The company has not received the waiver in respect of interest and penalties. I understand from management that KRA has indicated willingness to waive the interest and penalties if the principal tax is paid,” said the Auditor- General.

Kenya is one of powerhouses in the world and leader in Africa in terms of power generations and KenGen new CEO, Rebecca Miano must be hoping the a deal is reached soon so that she can start her Career at the State-owned firm on a high note.