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Profits at power producer KenGen dim

NAIROBI, Kenya, Oct 13 – KenGen has reported a 47 percent decline in pre-tax profit to Sh2.4 billion for the financial year ended June 2010 due to the severe drought which affected their hydro generation capacity.

The company said that due to the poor inflows, it was unable to supply the required amount of electricity to the Kenya Power and Lighting Company and therefore had to pay them Sh1.25 billion.

"Under the new capacity-based Power Purchase Agreement regime, our revenues are based on \’take or pay\’ capacity availability. This is however adjusted in the event that we are not able to deliver a certain threshold of energy. Due to the poor inflows, the company was unable to meet this threshold," Managing Director Eddy Njoroge explained in a statement.

Total revenues also dipped by 12 percent to Sh11.1 billion while expenses grew marginally to Sh8.6 billion as did the total income to the company which went up by 42.4 percent to Sh3.3 billion boosted by their investments in government securities.

The setback however did not impact the projects that the power generator is undertaking and which are designed to increase generation capacity by 500 Megawatts (MW) by the year 2013 and ensure the provision of reliable power supply to Kenyans.

The Board of Directors recommended a final dividend payment of Sh0.50 per ordinary share which shareholders are expected to approve during the December 9 Annual General Meeting.

Mr Njoroge said during the period under review, they were able to complete the 24MW Kiambere Optimisation project, the 35MW Olkaria II and 5.1MW Ngong wind projects.

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The Sh25 billion raised from the Public Infrastructure Bond would finance the Kipevu III and other projects outlined in the \’Good to Great\’ Horizon I strategy, he added.

The firm has expressed optimism that its short term outlook is bright following the good rains that were received early this year.

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"We are on course to deliver the Sang\’oro 21MW, Eburru 2.5MW, Kindaruma 32MW and Well Head technology 75MW before 2012," the MD further said.

The Horizon II strategy entails the implementation of 1,260MW from geothermal, a coal joint venture of 600Mw and over 100MW of wind by 2018.

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