Mwaniki Wahome
8 September 2009
Nairobi — Power producer KenGen aims to add 500 megawatts of electricity to the national grid with proceeds from the Sh15 billion public infrastructure bond offer.
Speaking during the offer launch at Hotel Intercontinental, Nairobi on Tuesday, the firm's managing director Eddy Njoroge said the Kipevu III thermal power plant, with a capacity to generate 120MW of power, will be a major beneficiary.
"It is part of KenGen's short term strategy to stabilise the power situation in the country by commissioning 500MW from fast-tracked projects by 2012," Mr Njoroge said.
He said that Kenya will require $4.5 billion (Sh400 billion) over the next 10 years translating to Sh40 billion every year for power production to meet rising demand.
Projects upgrade to scale up electricity production in Tana River delta at Kindaruma and Kiambere dams are also among those targeted. Some money will be used to buy a drilling rig for geothermal production.
The MD said that the company's long term focus was on renewable energy sources, particularly geothermal and wind.
Mr Njoroge said the former requires a huge investment of about Sh226 billion although it was cheaper in the long-run at Sh4.70 per unit compared to Sh5.20 that is currently charged.
Prime Minister Raila Odinga who presided over the launch said Kenya should strive for home-grown solutions to the power crisis facing the country.
"We have to think out of the box. It requires huge resources to meet the demand for power in the country and it does not help to always listen to advisors from outside," he said.
Strong balance
The PM said other corporate bodies with strong balance sheets should issue infrastructure bonds to tap into local resources.
Mr Odinga said countries like Nigeria and India had managed to increase their power generation capacity by over 10 times in a decade and Kenya could achieve the same feat.
The country, currently on a rationing regime, requires to scale up production to 10,000MW by 2030 to achieve the goals set in the blueprint.
The current installed generating capacity stands at 1296MW, with an effective capacity of 1204MW. The peak demand is 1071MW with demand growing at 8 per cent annually.
KenGen's bond is the first corporate offer targeting the retail segment. Those wishing to participate need a minimum of Sh100,000. It is open to both local and foreign investors as corporates or individuals.
Additional investments above the minimum will be in multiples of Sh100,000. Investors will enjoy a fixed net interest rate of 12.5 per cent.
The offer closes on 29th September and is expected to start trading at Nairobi Stock Exchange on November 9th.