Nairobi, Kenya — ESI-AFRICA.COM — 27 June 2011 – Kenya Power plans to invest nearly US$1 billion in its grid network over the next decade in a determined effort to cut inefficiencies and reduce costs, according to the company’s chief executive.
Joseph Njoroge said the company might issue bonds, tap loans from international development agencies, and might even offer a rights share issue to fund the plan, which should lead to double-digit profit growth in the next few years.
Kenya Power is the sole transmission and distribution utility in east Africa’s largest economy, where blackouts happen frequently due to generation shortfalls and an ageing grid.
“The investments will be put mainly into transmission lines and automation of systems,” Njororge said. “We want to do it differently. In urban areas we want to use underground cables and in rural areas we are going to use insulated cables,” he told Reuters.
“Those are very huge investments. They are going to be spaced over a period of not less than 10 years because you cannot rush. It is going to be very close to US$1 billion,” he added.
“Funds will be raised from a range of sources including multilateral lenders and local capital markets,” Njoroge said, adding that a restructuring of the firm’s balance sheet completed in January will boost funding chances.
“We have a good balance sheet. We have more opportunities of raising resources and therefore we will be able to reach our goal,” Njoroge claimed.
Kenya Power is 50% owned by the Kenyan government, giving it access to cheap financing from international development agencies such as the World Bank. But it will also use local investors.
“There are huge local resources,” said Njoroge. “We will have instruments like bonds. We may even have a rights issue because our asset base is increasing, giving us an opportunity to go back to the market,” he added.
“The project is expected to reduce supply interruptions, and cut loss of power and operating costs through automation,” Njoroge said. “It will allow the firm to post double-digit profit growth.”