NAIROBI, Kenya, Feb 26 – The Kenya Power and Lighting Company (KPLC) has received the nod from the government for its planned capital restructuring that will see the State cede some of its shareholding in the utility company.
Managing Director Eng Joseph Njoroge said on Friday that the process was on course with the next step being to seek for approvals from the regulatory authorities.
“We are just about to start the process of obtaining the approvals from the Capital Markets Authority (CMA) and other authorisations from the business fraternity so that we can proceed with the process,” he said.
The company made the announcement about the exercise in November last year which will see the firm float a Rights Issue and carry out a share split in the first half of this year in an effort to strengthen its balance sheet and also enhance the affordability of its shares in the market.
Eng Njoroge spoke as the utility company reported a 28 percent rise in profit after tax to Sh1.87 billion for the half year ended December 31, 2009 which was attributed to a reduction in transmission and distribution costs.
The company’s board has recommended an interim dividend payout of Sh3 for every share held.
Electricity sales went up marginally from Sh18.2 billion posted in the same period in 2008 to Sh19 billion due to an increase in demand which was 100 Megawatts (MW) higher than the installed capacity. The performance was posted despite the challenging environment characterised by drought in the country and which saw hydro-generation scaled down significantly.
Their fuel cost remained high due to increased generation from fuel-based thermal plants. This has translated into high power bills for consumers who have to pay a fuel cost charge of nearly Sh8 per unit of power. Water levels at the Masinga Dam which support other power generating plants is at 1,045 meters which is 10 meters below the optimum level and therefore cannot be relied upon to produce enough electricity for the country.
This led the utility firm to depend a lot on emergency power with about 20 percent of the energy sourced from British Aggreko plc (20 percent). KenGen which traditional is the utility’s biggest bulk supplier providing nearly 70 percent only managed to supply 48 percent of KPLC’s capacity.
However, Eng Njoroge assured that major projects such as the construction of various transmission lines which are earmarked for completion between this year and 2014 have been undertaken and are expected to inject an additional capacity of 1,700 Megawatts (MW).
“They are very many plans to improve the quality of power supply that our customers receive and also to enhance business growth which will translate in better returns for our investors,” he said adding that the investments would cost an estimated Sh137 billion ($1.8 billion).
The MD also hinted that most of the projects outlined under the Sh11 billion-Energy Sector Recovery Project which has been going on since 2006, would be completed by the end of this year.
The heavy investments coupled with the increased demand for power would also facilitate the accelerated connection of new customers and enable them achieve the target of increasing their customer base by one million in the next five years.