Kenya, Nov 22 – Kenya Electricity Generating Company (KenGen) is planning to register a subsidiary to help diversify its revenue streams by focusing on non-generation opportunities.
KenGen managing director and CEO Rebecca Miano, told shareholders during the company’s Annual General Meeting that the new company, KenGen Energy Services Limited, will leverage on the vast resources of the company to build a resilient business.
Miano said regulatory approvals for the 100 per cent owned subsidiary of KenGen were being sought. She said the new company would pursue several revenue initiatives.
“We want to run our business in a sustainable manner while creating value for our stakeholders, and one way of achieving this is to diversify our revenue streams,” Miano said in Nairobi on Wednesday during the AGM.
Among the revenue streams that KenGen Energy Services will be handling are consultancy services in geothermal development, drilling services, geothermal spa and tourism, geothermal mineral extraction and an industrial park to be established at the Olkaria geothermal field.
The Nairobi Securities Exchange listed company has been pursuing a revamped Good-to-Great (G2G) strategy, which is aimed at responding to changing market dynamics and utilizing available opportunities for growth.
The strategy envisages the creation of a sustainable growth by delivering 721 MegaWatts of renewable energy by year 2020 at an investment close to KSh135 billion.
It has already commenced the development of Olkaria V 158MW, marking the beginning of Horizon II project pipeline.
“We are committed to making available affordable and competitive power from renewable sources. To operationalize the achievement of this vision, priority initiatives are being pursued to improve the returns of current plants by optimizing and reducing operations and maintenance expenses and optimizing capital expenditure for future projects through lowering costs and improving delivery,” she said.
The company, she disclosed, was also improving Power Purchase Agreement (PPAs) regulation to increase profitability and pursue new financing approaches like equity partnerships in new projects, asset monetisation of plants, or asset-backed securities.
The company recorded a 34 per cent growth in after tax profit, Kshs 9.06 billion for the financial year ended June 30, 2017 up from Kshs 6.74 billion over the same period last year.
The company which produces about 75 per cent of electricity capacity installed in the country, selling its units to Kenya Power and Lighting Company, however recorded a one per cent drop on its electricity revenue which closed at Ksh29.36 billion down from Ksh29.5 billion last year.
The drop in electricity revenue has been blamed on poor hydrology, expiry of Power Purchase Agreement(PPA) for Embakasi GT 30MW, decommissioning of Lamu and Garissa power stations, evacuation constraints and forex exchange movements.
Total revenue decreased by eight per cent from Ksh38.6 billion to Ksh35.4 billion, attributable to declines in energy revenue, forex recovery adjustments, steam revenue and commercial drilling services.
In the financial year 2016/17, the company generated about 74 per cent of the electric energy consumed in the country.
KenGen will not pay dividends as the board on Wednesday recommended the re-investment of the cash generated in projects for better value.
KenGen Chairman Joshua Choge said the company had revamped its strategy for the next decade with a primary focus on developing additional renewable energy.
“Investing in renewable energy will yield competitively priced electricity which will significantly grow the market share, translating into increased shareholder value,” he said.
By Martin Mwita