KenGen seeks Sh500bn for expansion plan

Electricity generation firm KenGen is seeking nearly half a trillion shillings in three years to finance expansion of its power generation.

Managing director Simon Ngure told an investor’s briefing in Nairobi Wednesday that the money will be sought through debt and equity contribution by a rights issue.

“KenGen needs to look for additional finance of $5.5 billion (Sh467 billion) in the next 40 months. Debt component will be 70 per cent while the rest will be equity,” Mr Ngure said.

The company expects to raise about Sh140 billion ($1.65 billion) from its shareholders through a rights issue. It expects to add up to 2,500 megawatts to the national grid, which is half of the 5,000 megawatts the Ministry of Energy and Petroleum has targeted to achieve in 40 months.

Mr Ngure said the company would team up with private investors to develop the power plants. Private companies are expected to provide part of the debt capital for the projects, while the rest would be from financial institutions.

KenGen is listed at the Nairobi Securities Exchange and is 70 per cent owned by the government. It is not clear whether the rights issue will dilute the government’s stake as the company is yet to finalise talks with the Treasury.

“We are working with the government to see the best way to do it. It may include a mixture of options.

“The government may want to cede some of its ground, but we are working together to develop that matrix. We do expect that some equity will come from Kenyans and joint venture partners,” Mr Ngure said.

KenGen hopes to generate 700 megawatts from geothermal resources, 120 megawatts from wind energy, 700 megawatts from natural gas and 960 megawatts from coal resources.

A Ministry of Energy tender committee on Tuesday began evaluating 62 bids from private companies that want to develop the coal and natural gas fired power plants together with KenGen.