Miano: We plan to increase geothermal power to ensure reliable supply, affordable cost

Wednesday March 18 2020

In this interactive series, we invite readers to send in questions to selected public figures. Answers will be published in the next print and online editions. This week, KenGen CEO and MD Rebecca Miano responds to your questions

1. There are the never-ending stories of anticipated more energy generation than needed in the near future, leading to higher tariffs because the producers have to be compensated. Should we believe such stories? Githuku Mungai

The government’s Big Four agenda on housing, manufacturing, universal healthcare and food security will require more electricity and power demand is therefore expected to continue growing. Power generation is guided by the government’s planning model called the Least Cost Power Development Plan which ensures that power plants developed are cost effective and based on projected demand needs.

2. An organisation such as KenGen which is over 50 per cent owned by the government at times find difficulties when it comes to getting World Bank (WB) loans because private investors in parastals stand to benefit once the money is invested, which sees the WB stay away from advancing much needed loans for modernisation. How do you think this handicap can be avoided in the future? Githuku Mungai

Our journey with the World Bank has been long and beneficial. World Bank has been and continues to be a central player in the delivery of our green energy projects. The financial institution has been with us in financial terms and through capacity building. Therefore, the assertion is not true. We have a cordial working relationship with the World Bank and other International Development Finance Institutions which are keen to finance our development plans. At the same time, we ensure that we maintain our track record of successful delivery of projects on time and on budget; a healthy balance sheet and servicing of our development loans which appeals to development partners.

3. You recently hired a company secretary from a top bank in Kenya. Does KenGen pay better than banks? Githuku Mungai

KenGen is a strong brand that appeals to prospective employees from both the private and public sectors. Our company secretary is not the first talent from the private sector and/or multinational companies. Our employees are satisfied with the positive impact our business has on society. At the same time, we benchmark ourselves with the private sector in our practices and processes and take pride in the fact that we are comparable to leading companies in the region.

4. Do you believe the recently increased electricity tariffs were justified? Edward B Wekesa, Marsabit

The body charged with regulating power tariffs is the Electricity Regulatory Commission and we have forwarded this question to them.

5. Do you have any plans of putting up power stations on major rivers such as Lusimba and Yala in Western Kenya? Edward B Wekesa, Marsabit

Hydro power is site-specific and requires sufficient head and discharge to economically generate electricity. At the moment, there are few sites left for new hydro stations. For western Kenya, we have Sondu, Turkwel, Gogo and Sang’oro. Additionally, we are measuring flows for river Kuja for hydro development.

6. When we compare electricity production in Kenya with other East and Central African Countries, Kenya’s is very expensive. What do you think is making the power production in Kenya very expensive? Edward B Wekesa, Marsabit

Kenya’s cost of power is competitive in the region, with the exception of countries like Ethiopia and Egypt that apply subsidies. The cost varies depending on generation mix. When there is poor rainfall, use of the expensive diesel power increases. During periods of good rains like in the past few months, cheaper hydro power is generated. The Government and KenGen have been pursuing a strategy to increase geothermal power to ensure reliable supply at an affordable cost.

7. Will our country ever be self- sufficient in terms of our energy needs? Francis Njuguna, Kibichoi

Energy security is a key focus for our government. Over the last 10 years, KenGen has worked with other agencies in the sector to stabilise energy supply. We have adequate power with plans to develop more generation capacity to meet the growing demand through the government’s least cost power development programme.

8. How much energy are we currently generating locally? And equally, how much of our energy use is still coming from the outside, say from the neighbouring Uganda? Francis Njuguna, Kibichoi

Kenya’s installed capacity is 2370MW, with KenGen contributing 1631MW, which translates to more than 70 per cent of the national energy consumption. Minimal energy is imported from Uganda. Regional interconnection of power systems is encouraged to enhance stability.

9. For the last three years, KenGen has not issued any dividend to the shareholders despite the fact that it has been making a profit. The share price is also very low and only a good dividend can give us some satisfaction. Will there be dividend this year? Eliud Mathu Ngugi, Kayole

Our commitment to grow shareholder value remains a key focus area as evidenced by our continued strong performance. However, to ensure the long-term sustainability and profitability of the company, the Board of Directors in the last few years did not recommend a dividend payout but instead decided to plough back profits to fund the huge capital expenditure for the numerous projects lined up for implementation. The 2017/18 financial year has just been concluded and our financial account process is ongoing. We would like to assure our shareholders that this matter shall be deliberated on by the Board and decided upon at the next AGM.

10. Unemployment especially among the youth is a major problem facing the entire country. What steps have you put in place to ensure that KenGen becomes an equal employer for all Kenyans regardless of ethnic background? One example appears to be the geothermal plant in Naivasha where every employment opportunity that comes is not filled based on merit but is considered a preserve of people from a specific region. A desktop valuation reveals that seven out of 10 employment opportunities including even the guards, cleaners and other subordinate do not reflect the face of Kenya. Seth Mwangani, Nairobi

KenGen is a public entity and our practices and policies support diversity and inclusion. Indeed, our total workforce reflects the face of Kenya. Our immediate focus is to improve gender diversity which now stands at 23 per cent female and 78 per cent male and have put in place mechanisms to shore up women’s interest in technical disciplines such as engineering, which have in the past remained the a preserve of men. As a company, we are convinced that our efforts are bearing fruit since we are beginning to see the number of women in technical fields increase, albeit slowly.

11. Company shareholders’ annual general meetings no longer transact serious business and it seems shareholders just attend to collect free gift packs with T-shirts, calendars, caps , umbrellas and of course free lunches. At KenGen, what do you plan to do to ensure that shareholders actively and objectively participate in these meetings and have a clear understanding of the resolutions to be passed at least to safeguard their investments? Dan Murugu, Nakuru

KenGen is a company that believes in changing with the times and will continue to align its business with stakeholder needs and circumstances. In addition to compliance with statutory and regulatory requirements, we carefully review the structure of the annual report, AGM notice and other documents to ensure they are clear, concise and provide all the necessary information to aid our shareholders in preparation for, and participation in the meeting.  We also structure our annual general meetings to allow shareholders adequate time to participate and give feedback to the board. This shall remain our commitment in this year’s AGM.

12. In 2012, I was among the lucky 300 shareholders who were picked for that year’s KenGen shareholders’ tour in Naivasha. I did not find the tour of any value for money, bearing in mind the direct cost implications to the company and the selected shareholders alike. Do you still hope to go on with this project when so many shareholders all over Kenya have raised serious doubts against the same? Dan Murugu, Nakuru

As part of good corporate governance and regulatory compliance, there is a need to continuously engage our stakeholders, including our shareholders, on the performance, progress and developments in the company.  This engagement should extend beyond the traditional annual general meetings. It is in this spirit that we organised tours to our installations to give our shareholders a glimpse into our operations. The feedback we have received from other shareholders who have attended these tours have been positive. However, we welcome your feedback and shall review this mode of engagement to ensure we maximise value for our stakeholders.

13. Some various public schools countrywide were used as centres for last mile electricity connectivity but up to now, many villagers especially in Chepalungu have not benefited. What is your take? Jeff Chepkwony, Sigor

Kenya Power is better placed to answer this question and we have therefore referred it to them.

14. What are the measures you put in place to curb the increase in corruption related issues in the energy sector? Jeff Chepkwony, Sigor

KenGen continues to invest in programmes that bring out the best in its people. We believe that ethical behaviour is critical in achieving our Good-to Great Transformation strategy and will continue to invest in building employee capacities to embrace positive behaviours and practices. At the same time, we have put in place an independent anonymous reporting system which enables employees and other stakeholders to report incidents of corruption and complaints. Toll free Line 0800722626, e-mail [email protected], Website: www.tip-offs.com.  The company has formed a corruption prevention committee that monitors and addresses the risk. KenGen has developed a code of conduct that binds all employees to conduct business in an ethical manner.

15. Since youths are the majority in the country, what are the programmes you have put in place to incorporate them in the sector? Jeff Chepkwony, Sigor

KenGen is committed to making a positive change in the society and invests enormous resources and time in programmes that empower the youth to contribute to national development. Every year, the company offers attachment and internship opportunities to hundreds of youths from different parts of the country.  Between 2017 and now, the company has enabled 1,169 young people to acquire skills and experience in various disciplines.