Kenya Power and Lighting Company (KPLC) has posted a 31 per cent rise in first-half year profits.

The firm also raised its interim dividend 50 per cent, helping lift its shares on Friday.

Chief Executive Joseph Njoroge also said the company hoped to raise an annual Sh268 million ($3.5 million) leasing spare capacity on its fibre-optic network.

The country’s sole power distributor said electricity sales rose five per cent to Sh19.1 billion in the six months to December while pre-tax profit jumped to Sh2.86 billion.

First-half year earnings per share rose 28 per cent to Sh23.67, and KPLC lifted its interim dividend to Sh3.

Analysts welcomed efforts to keep costs under control, such as an 11 per cent drop in transmission and distribution costs and a three- per cent drop in fuel costs.

"We think the results have been impressive. KPLC comes out strong partly because of an increase in sales, and cost management," said Wycliffe Masinde at Kestrel Capital. "It is very encouraging. The concern with investors will be the balance book restructuring."

KPLC shares were up 11 per cent on Thursday evening, with analysts saying further gains may be limited until detail of a share conversion plan was known.

The company is planning a share conversion and a rights issue in which the Government will give up some preference shares for ordinary shares.

"This ratio number has yet to be disclosed and the attendant dilution of shareholders of record not yet known," said Aly Khan Satchu, an independent trader and analyst.

"This is the unknown known and clearly material, but price action indicates an exchange that will be favourable to ordinary shareholders," he said.

Seeking to diversify its business, KPLC is leasing out extra capacity on 36 unused fibres on its 48-fibre network to three local telecoms firms after taking up bandwidth for its own internal communications and monitoring its power grid.

KPLC said it had connected 100,829 customers in the six months to December, last year and was on target to add 200,000 by the end of the financial year.

It said it was spending 12.3 billion shillings in 2009-10 on projects to boost transmission and reduce power losses.

KPLC said it and state-owned electricity transmission company.

It is working on transmission projects that would cost $1.86 billion by 2014, and add 5,498 km of high-voltage lines and a 1,200 km fibre optic line to its grid.

The company said it expected to add an extra 1,700 megawatts of electricity generating capacity to its grid by 2013-14 to meet every growing demand.

Kenya often suffers power cuts and the situation was exacerbated last year when drought cut water levels at the hydro plants that produce the vast majority of its power.

—Reuters