KenGen banks on bond market to raise Sh30bn

The Kenya Electricity Generating Company (KenGen) has announced plans to raise Sh30 billion through a 20-year bond.

The money, according to a statement from KenGen will be used to finance geothermal power production.

“We shall use this capital to build power plants and use the revenue from the sale of power to pay those who have invested in us,” said outgoing KenGen managing director Eddy Njoroge.

This initiative will be the second time in under five years that the majority State-owned electricity generator will be turning to the bond market for capital.

In 2010, KenGen issued a 10-year public infrastructure bond where it raised Sh25 billion.

The company’s total installed capacity is 1,232 megawatts currently. It plans to raise this to 1,750 megawatts by 2015 and increase the same to 3,000 megawatts by 2018 with bias to geothermal production.

In the next five years, Mr Njoroge said that the company will need about USD5 billion (Sh437.4 trillion) to generate electricity in order to meet rapidly growing demand.

KenGen intends to finance repayments of the planned bond through revenue generated from the sale of geothermal power.

According to the company, the funds raised in 2010 were partly used to upgrade the firm’s hydro power stations to boost their capacity and efficiency while the rest was pumped in setting up of the 280 megawatt geothermal plant at Olkaria.

The project is billed to be the single largest geothermal power plant in Africa and is scheduled for completion by 2016.

KenGen generates geothermal electricity from steam that is drilled at the geothermal fields by Geothermal Development Company, a state corporation which was established to drill geothermal steam as part of the government’s efforts to partly shoulder the risks associated with drilling.