KenGen’s rights issue plan awaiting Treasury approval

The country plans to increase its power generating capacity by 17,000MW by 2030 when it will transit to an emerging economy status. [PHOTO: FILE/]

By Macharia  Kamau

Kenya Electricity Generating Company (KenGen) plans to raise Sh15 billion through a rights issue to finance expansion of its power generating capacity.

Even though it received approval from shareholders in a December 2013 Annual General Meeting (AGM), the power producer still needs permission from the National Treasury, which is the corporation’s main shareholder. The Energy ministry has in the recent past stated that the Government would not participate in the rights issue but instead convert some of its debts into equity.

This is expected to lower Government’s shareholding in KenGen. Treasury is however, yet to give the company the way forward, which could see the rights issue pushed to a later date. KenGen, however, said it is still in talks with Treasury and expects to undertake the rights issue in June.

“We are still in talks with Treasury,” said Albert Mugo, the utility firm’s chief executive.

In December, KenGen’s shareholders approved the rights issue that would increase the number of KenGen’s ordinary shares by 2.2 billion. The firm will use the proceeds from the rights issue to increase its installed capacity by 840 megawatts by end of 2016. Currently, the firm has installed capacity of 1,252MW, accounting for upwards of 70 per cent of the country’s 1 700MW total installed capacity. The 840MW is in line with a Government plan to increase installed capacity by 5,000MW over the next 40 months, beginning last July.

Expansion plan

The firm said the money to be raised through the rights issue was part of a Sh430 billion expansion plan to see KenGen through to 2018. Under the plan, KenGen hopes to raise its generation capacity to 3,200MW from the current 1,200MW.John Mudany, finance and commercial director at KenGen said the Sh430 billion would be raised through a combination of both debt and equity. A consortium made up of Dyer and Blair, Barclays, KPMG and law firm Hamilton Harrison & Mathews will be the lead arrangers for the fund raising, including the rights issue.

Mudany said the projects had received financing commitments, some of them close to 100 per cent, from financial institutions (DFIs).