KENGEN is considering overstepping Kenya Power and directly sell electricity to industries near its plant to grow its revenue.
It is also targeting an additional 720 megawatts at an estimated cost of Sh203.90 billion ($2.005 billion) by 2020.
The listed company which is majority owned by the state currently has a 1,618 MW capacity.
“It (direct power sales) will probably take some couple of years because there's still some work there,” KenGen's director for corporate and regulatory affairs Simon Ngure told an investor briefing in Nairobi yesterday. “Nevertheless, within the next three months or so, we are going to put out our application because we had to wait for some data to come in so that we can make application to the regulatory commission.”
He said a consultant undertaking a study on the planned business strategy is expected to hand over the final report in two months, after which company will seek approval from the Energy Regulatory Commission.
The plan is largely targeting the proposed Naivasha Industrial Park, where Industrialisation and Enterprise Development ministry will be seeking to attract large manufacturers by selling electricity at half the market price.
Chief executive Albert Mugo, however, said charges for direct sales will be will be determined by the ERC.
About 631MW of the planned 720MW will be generated from its geothermal fields in Naivasha at an estimated cost of $1.83 billion (Sh186.11 billion).
The remainder of 90MW will be generated from wind farms at Meru (80MW) and Ngong (10MW) at a total cost of Sh17.49 billion ($172 million).
The expansion will be financed through a mix of debt and equity financing. Mugo reassured KenGen's debt ratio – total debt to assets – at 55 per cent was manageable.
“We can go up to 70 per cent and therefore we still have some headroom,” he said.
KenGen's total debt stood at Sh150.04 billion comprised of Sh69.51 billion on-lent by the government, Sh42.80 billion guaranteed by government and Sh37.73 billion direct loans.
KenGen's total half-year revenue to last December increased 52.05 per cent to Sh18.52 billion, while net profit rose 15.01 per cent to Sh5.67 billion.
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