NAIROBI, Kenya, Apr 7 – Kenya’s high electricity charges are likely to remain for longer should the country not receive adequate rainfall to allow for the departure of independent power producers as planned.
KenGen Managing Director Eddy Njoroge says the planned exit of the independent power producers from contributing to the national grid by June is highly dependent on the amount of rainfall the country receives.
“We had given notice that will terminate emergency power by June of this year, we are now watching the rainfall … if it is not sufficient, we will have to relook (the deal),” Mr Njoroge said.
Mr Njoroge observed that the company would rather retain the emergency power producers and have sufficient electricity despite it being expensive.
Meanwhile Mr Njoroge reaffirmed that plans for the company’s Public Bond offer of Sh15 billion were on course with presentation of the prospectus to the capital markets authority next week.
“We are in the process of finalising the Information Memorandum for the Bond, then the Board’s approval after Easter,” Mr Njoroge said.
The company is targeting to raise this money to finance a number of projects including the thermal plant in Mombasa, the raising of the Masinga Dam spillway by 1.5 meters and a third generation unit at Kindaruma dam.
These projects are expected to contribute an extra 200MW to the grid.
“The total cost of these projects is $250 million, we will raise $200 million through the Bond and $50 million we will self finance,” Mr Njoroge said.
He expressed confidence that KenGen would raise the full amount despite the on-going economic hardships.
“Our move is advised by the liquidity that we have been told is there in the market and of course the move by investors from equities to fixed income instruments,” he said.
Adding: “We are very confident we are going to raise that amount of money.”
Mr Njoroge further reassured that the debt was viable as it would come with its own revenues.
If we are taking up a debt for Kipevu we will have a separate power agreement with Kenya Power and Lighting (KPLC) and our total debt vis a vis our reserves is very low,” he said.
He noted that investment in additional power generation capacity through the bond is part of KenGen’s five-year strategy (2008-2012) of increasing its capacity by 500MW to stabilise the power situation in the county.
Unfortunately currently the country has a reserve margin of eight percent while it requires one of 15 percent.
“Actually without the emergency power producers we have no reserves,” Mr Njoroge noted.
He said this was the reason KenGen had advertised for an independent power producer to put up a co- plant.