KenGen unveils grand Sh468b plan to develop energy sources

By WINSLEY  Masese

Kengen acting MD Eng. Simon Ngure speaks at the company’s investor briefing yesterday. [PHOTO: COURTESY/STANDARD]

The Kenya Electricity Generating Company (KenGen) plans to raise Sh467.5 billion in the next three years to develop sources of energy across the country, the company announced on wednesday.

Acting Chief Executive Simon Ngure said a third of the money – Sh140.25 billion – will be raised through a combination of selling additional shares to the public – through a rights issue – or inviting partners for joint venture projects.

“The equity we are looking to raise needs to come in before we borrow. We will raise some equity from Kenyans,” he said.

finance institutions

The remaining Sh327.25 billion will be raised through borrowing from development finance institutions. The amount the electricity producer seeks to raise in the next three years is a third of Kenya’s Sh1.6 trillion budget for the financial year that ends in June 2014.

This underlines the massive investment going to meet Kenya’s huge demand for power set to rise in the coming years.

Kenya Power, the electricity distributor, plans to issue a Sh25 billion corporate bond to fund the upgrade and expansion of the electricity network.  Kenya’s current installed peak demand – the power demand in the evening when people are back home watching TV, cooking and lighting – is 1,800MW.

This is projected to shoot up three times to 5,400MW in the next five years, driven by huge demand from the iron and steel smelting industry and the Standard Gauge Railway line.  By 2018, Kengen hopes to have contributed 2,500MW through geothermal, hydro and wind projects.

The Olkaria geothermal plant should be completed by the second quarter of 2014. Other projects will also need funds hence the funds sourcing activities. Kengen’s rights issue should happen in 2014 if shareholders give the green light at the annual general meeting scheduled for later this year.

The government has a 70 per cent interest in Kengen, which is publicly listed at the Nairobi Securities Exchange (NSE). It is not clear yet whether the government will sit out of the rights issue or inject more money.

Previously, there were reports of the government looking to sell some of its shares but the state could not get a good price. However, prospects have been brighter this year.

 Kengen’s stock is the third best performing share on the NSE, up 90 per cent since the beginning of the year to trade at Sh17. 

retail investors

 Kengen remains an emotive share for many Kenyans because it was an initial public offer, which drew many retail investors to the stock market. In 2005, the government sold 30 per cent in the electricity-generating firm to the public.