By James Anyanzwa and Njiraini Muchira
Power producer (KenGen) is shopping for financial consultants to advise on the modalities of raising a massive Sh420 billion ($5 billion) in a fresh financing programme.
The new funding proposal comes barely three years after the utility firm raised Sh25 billion through a public infrastructure bond to fund the expansion of its electricity generating installations.
KenGen, the country’s leading electric power producer with an installed capacity of 1,183 MW (74 per cent of the national capacity) is reviewing proposals from qualified firm(s) to provide the services of a financial advisor and arranger.
The consultants will be expected to advise on the best option of executing the proposed financing plan in line with the company’s corporate leverage ratio of 70 per cent debt and 30 per cent equity.
The tender, which has attracted seven consortia of both local and international bidders, will be awarded next month. The publicly listed firm is seeking additional funds to facilitate production of an extra 2,000MW of energy by 2018. The projects, dubbed ‘Horizon 2 Projects’ and which are lined up for completion in six years include coal (600MW), Geothermal (560MW), Gas (500MW) and Wind (250MW).
“The tender was opened last week and we target to pick the winner before the end of next month,” Mike Njeru, the company’s corporate affairs manager told Business Weekly. In November 2009, KenGen issued a 10-year bond raising Sh25 billion to fund its power generation projects.
The proceeds of the bond issue were mainly utilised on the so-called ‘Horizon 1 projects.’ These included 12 projects comprising of five hydros, five geothermal, one thermal and one wind. The five hydro projects with a capacity of 86 MW comprise of one new project (Sangoro) while the other four are capacity optimisation projects.
The five geothermal projects have a capacity of about 317.5MW, thermal (120MW) and wind project (5.1 MW). The total horizon 1 projects are expected to yield 528.6MW to the national grid. Horizon 1 expenditures comprise of power generating Projects which will be completed and commissioned by June 30, 2013, while Horizon 2 consists of projects that will be completed between July 1, 2013 and June 30, 2019.
Some of the Horizon 2 Projects commenced as early as 2009. According to the company’s information, KenGen’s investment (excluding interest incurred during the construction phase) under both Horizon 1 and 2 is estimated at Sh600.6 billion ($7.15 billion). Horizon 1 and 2 expenditures are put at $1.68 billion (Sh141.1 billion) and $5.47 billion (Sh459.4 billion) respectively.
The country’s power demand for the last three years, is estimated at eight per cent per annum. The State owns 70 per cent shareholding in KenGen while the remaining is held by the general public.
