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Kenya Power looks to refinance
$500mn of debt
KENYA KENYA Power is looking to refinance KES55bn Merchant Bank (KES2.4bn, $22mn) and Equity
($505mn) of its commercial debt in a bid to boost Bank (KES4.9bn, $34mn).
its liquidity position amid mounting supplier Vikiru said that the government, Kenya Pow-
debt and losses. er’s majority shareholder with a 50% stake, had
“The Kenya Power and Lighting Company not ruled out offering guarantees to attract finan-
Plc is seeking expressions of interest (EoIs) from ciers to participate in the debt refinancing.
suitable financial institutions for the refinancing Meanwhile, the Kenyan government says
of its commercial debt,” the company said in a it will ensure that Kenya Power pays its debt to
statement. state-owned generator KenGen and other power
Stephen Vikiru, Kenya Power’s general man- producers.
ager for finance, said the company was seeking The industry is concerned that Kenya Power’s
to take advantage of ultra-low interest rates default could hurt the entire supply chain if it is
in developed markets such as Europe and the not resolved in the near term.
United States to refinance its existing debt. KenGen, whose sole customer is Kenya
“Interest rates are now low compared to five Power, had not been paid KES23.9bn ($219mn)
or six years ago. We can get banks that will offer by the monopoly as of June 2020 and has one of
us lower interest rates that are also profitable for the largest claims.
them,” he said. The utility also owes independent power
Vikiru added that the company was seeking producers (IPPs) KES20.5bn ($188mm), even
financiers offering both lower rates and longer though it was not immediately clear how much
loan life, noting that the value of the loans that of the amount is in default.
will ultimately be refinanced will depend on the The government said Kenya Power would set-
offers received. tle its obligations, though no timeline was given.
The process could take up to six months. “The government is a shareholder in both
Most of Kenya Power’s current commercial loans KPLC and KenGen and will make sure that both
are denominated in US dollars and have interest companies are [financially] feasible,” said Energy
rates ranging from 2.5% to 5.75% plus a Libor Ministry official Joseph Njoroge at KenGen’s vir-
margin. tual annual general meeting held last week.
Kenya Power’s current lenders include Stand- “There have already been interventions
ard Chartered, whose total outstanding loans as including deferring KPLC’s obligations to the
of June 2020 were KES39.3bn ($361mn), Rand National Treasury.”
Week 17 29•April•2021 www. NEWSBASE .com P7
