KenGen has announced plans to increase its electricity production capacity by 725 megawatts by the year 2020, all of which will be from renewable energy sources.
The firm, which is the largest power producer in Kenya, said a bulk of this new energy will be generated using geothermal. It is putting up seven new plants that are currently at different stages of development.
The geothermal plants will have a total generating capacity of 635 megawatts. Additionally, the firm is upgrading its Ngong Wind Park and expects to add some 10MW to the current 26MW.
KenGen is also planning to develop another Wind Park in Meru that will have an installed capacity of 90MW.
“We will soon start tendering for Olkaria 5, which will have a capacity of 140MW. We are looking at about 25 months from now before we can start power generation from the plant,” said Albert Mugo, the KenGen chief executive, during an investor briefing Wednesday.
The new fleet of power plants will increase KenGen’s capacity to about 2 300MW, from the current 1 600MW.
The planned projects are however a source of misery for shareholders, especially those that had invested with the hope of getting a dividend.
Despite an 18 percent growth in revenues to Sh39 billion last year and a 40 percent growth in profit before tax to, KenGen reported a 41 percent decline in profits after tax for the financial year to June 30. And because of this, the firm said it would not pay dividends to shareholders.
The decline in profitability was due to a higher tax charge, where it paid Sh4.2 billion in taxes this year, as opposed to a Sh2 billion tax credit last year. The tax credit came after the company commissioned the 280MW plants at Olkaria, enabling it to benefit from tax incentives for firms setting up equipment or industrial plants in rural areas.
Mugo, however, explained that in addition to the drop in profitability, KenGen would not pay dividends for the last financial year as it needed to put the money back in business, notably investing in the planned projects.
“We are not running away from our tax policy but there is always a provision that we can only pay dividends within certain limits including the availability of cash and the planned projects. This is temporary and we are asking the shareholders to bear with us for a better future,” said Mugo.