Kenya Electricity Generating Company (KenGen) retail shareholders have almost been edged out of the company’s shareholding after an aggressive participating in a recent rights issue by institutional investors, including the Government.
The shareholding of the minority investors has been reduced to 14 per cent by end of the financial year to June 30, 2016. This is in comparison to 26.78 per cent, which was the ownership of the minority shareholders in the power producer. According to the company’s annual report and financial statements for the year to June 2016, KenGen has over 192 000 minority investors.
During the rights issue held in June this year, the National Treasury converted a Sh20.2 billion loan into equity, which had the effect of pushing up its shareholding to 74 per cent as of June 30 this year, up from 70 per cent as of June 30, 2015.
There have also been an increase in the number of institutional investors on KenGen’s roll of investors. While the ownership by institutions remained at about the same levels over the two years – 82 per cent in 2016 and 81 per cent in 2015 – the actual number of institutions investing in the company went up to 20 as of June this year, up from 10 in the financial year to June 2015.
KenGen raised Sh26.4 billion in the June 2016 rights issue, which it said would be used in construction of power generation projects. These projects are expected to add 721MW of electricity from geothermal and wind sources to the national grid in the next five years. The projects will be developed at a cost of US$8.1 billion (Sh800 Billion) and are expected to come online by 2020.
Eng Albert Mugo said the additional capacity was in line with the Government’s efforts to make power accessible and affordable.
He said the company has already secured some funding from development partners and internal resources while other financing opportunities are being explored.
In June the company successfully raised Sh26.4 billion through a Rights Issue, whose proceeds will go into the development of the energy projects.
The company has identified geothermal projects to be undertaken as Public Private Partnership (PPP) projects as part of project implementation.
The projects lined up for completion by 2020 comprise of Olkaria V 140MW, Olkaria VI 140MW, Olkaria VII 140MW, Olkaria I Unit 6 70MW, Wellheads 25MW, Olkaria I Rehabilitation 5.7MW, Olkaria I AU & IV topping plant 60MW. The Meru Wind Phase I 80MW, Geothermal Wellheads 50MW and Ngong III project 10MW are also at an advanced stage.
“With our internal well equipped and motivated workforce coupled with requisite funding from our bilateral partners for the projects in the pipeline, KenGen is well positioned to deliver on promise and continue to be the market leader in the provision of competitively price electric energy in the country,” said Mugo.
KenGen is also exploring other businesses under the new business initiative that seeks to improve our revenue stream from non-generation based revenue and has identified an industrial park in Olkaria area.
“The development of the KenGen Industrial Park will not only target the optimisation of KenGen business operations, but also support the Government of Kenya’s (GOK’s) industrialisation strategy as a pillar for economic growth and job creation,” said Mugo.
Mugo said the Industrial Park will serve as one of the drivers for regional development and will create significant employment opportunities.
KenGen Chairman, Joshua Choge, announced that the planned projects resulted into the decision of the Board of Directors not to recommend dividend payment.
The firm had come under heavy fire from the minority shareholders, who wanted an explanation as to why they would not be getting a dividend for the year to June despite the company having made profits. KenGen report a net profit of Sh6.7 billion during the financial year, which was lower than Sh11.5 billion the previous year. The firm has a policy where it gives a third of its net profits to shareholders as dividends. It however said it would not be paying dividends this year and instead invest the money in the planned projects.