Kenya power firm eyes revenue rise

February 2, 2010
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, NAIROBI, Kenya, Feb 2- The Kenya Power and Lighting Company’s (KPLC) revenues are set to improve significantly after the firm leased its excess fibre optic capacity to three telecommunication providers.

KPLC Managing Director Eng Joseph Njoroge on Tuesday signed agreements with Safaricom, Jamii Telecommunications and Wananchi Group that will see them lease one pair of fibre each on the 500 kilometre Nairobi-Mombasa line.

“We have good figures for the rent of the fibre optic, the Nairobi Mombasa route is $32 (Sh2400) per pair per kilometre per month which for 20 years translates to Sh288 million,” explained Mr Njoroge.

The Safaricom’s lease will run for 20 years while the other two firms took out a five year renewable lease for which they will each pay Sh27 million.

The lease offers that were floated last year were in two categories; one for 15 years described as Indefeasible Right of Use (IRU) which required the bidder to pay upfront, but Safaricom made a request for 20 years which was accepted by the utility firm.

The other was a five year lease payable bi-annually and renewable after the five year period.

KPLC last year commenced the installation of about 1,500 kms of high quality fibre optic cable on its countrywide transmission network primarily for its own use as part of the implementation of a Sh1.9 billion System Control and Data Acquisition (SCADA) project.

The cable grid that is commonly referred to as ‘dark fibre’ has a capacity of 48 fibres out of which KPLC will utilise 12 fibres for its communications needs.

Mr Njoroge said 18 more pairs are available to any firm that is licensed to provide telecommunications services in Kenya and Uganda as the network also extends to Tororo.

The renting of the cables followed the granting of a Network Facility Provider – Tier 2 licence by the Communications Commission of Kenya that saw it officially enter into the telecoms business raising fears of competition among other network providers.

However, Mr Njoroge maintained the commercialisation of the cables provides an opportunity for them to not only diversify their revenue streams but also increase shareholders value.

Extra capacity will be also available on the Nairobi-Nakuru-Eldoret-Tororo; Eldoret-Kisumu; and Nairobi-Kiganjo-Nanyuki routes. Once the installation of the western route is completed, he forecast increased demand for capacity and even higher income for the company.

“KPLC network is well placed to provide the needed link to the upcountry locations as well as the landlocked neighbouring countries,” he added.

While signing the agreement, Safaricom Chief Executive Officer Michael Joseph said renting the dark fibre would greatly reduce the cases of vandalism of the providers’ cables.

 
 

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