Page 12 - AfrElec Week 46

AfrElec NEWS IN BRIEF AfrElec

countries could not find a solution to these have brought this matter to a close during the Auditor General notes.
disputes, they have to ask for mediation. these challenging economic times, and “These conditions indicate that a material
Washington had brokered a tripartite this removes one more legacy issue for the uncertainty exists, which may cast significant
discussion between the three countries, Group. The conclusion of this matter and the doubt on the company’s ability to continue as
in presence of the President of the World receipt of these funds would also allow the a going concern,” AG Gathungu notes in her
Bank (WB) starting from November 6, Group to allocate more time and resources opinion of the company.
2019 until February 27 and 28, 2020 when to invest in new initiatives to generate value The electricity distributor’s debt to its
Ethiopia apologized for being absent from the for our shareholders.” One of the underlining various independent power producers and
negotiations. During these rounds of talks, strengths of the Transcorp Group is the suppliers was at a Sh47.9 billion by June.
tangible outcomes were agreed on among quality of its assets, and the OPL 281 oil block This includes Sh23.7 billion owed to
the three parties concerning the rules and is a significant part of its portfolio. It recently KenGen, Sh19.5 billion owed to Independent
mechanism of operating the dam and the added to its energy asset mix a 1,000-MW Power Producers(IPPs), and another
filling process of the reservoir during the power generation plant (Afam Power), Sh4.7 billion owed to Kenya Electricity
drought and prolonged drought; however, the making it the leading power producer in Transmission Company (KETRACO).
Ethiopian and Sudanese refused to sign the Nigeria with a combined installed capacity of Its profit for the year to June 2019 dipped
US/WB-drafted deal. 1,936 MW across its power plants. 91.9 per cent to Sh262 million, from Sh3.3
TRANSCORP billion the previous year, blamed on an
increase in power purchase costs which went
up by Sh18.1 billion to Sh70.9 billion, from
GENERATION POLICY Sh52.8 billion in a similar period in 2018.
Its commercial debt is to the tune of about
Transcorp and Efora settle State to save Kenya Power Sh60 billion.
Energy PS Joseph Njoroge has however
legal disputes over OPL 281 as liabilities mount affirmed the government’s support for the
troubled company,ruling out any possibilities
Nigeria’s Transnational Corporation The Kenyan government has committed of its nationalization, which is an option
announced today that it has entered into an to support insolvent Kenya Power whose the government has considered in trying to
agreement with Sacoil Holdings (now Efora liabilities now exceeds its current assets by salvage national carrier Kenya Airways.
Energy) to settle all existing legal disputes Sh70.9 billion, with the Auditor General Njoroge on Friday told shareholders
around its Oil Prospecting Licence 281 (OPL casting doubt on its financial soundness. that the Energy Ministry is in talks with
281). The power utility firm has an asset base the National Treasury to cushion the firm
The agreement provides for the full and of Sh44.2 billion, for the year ended June 30, through among others, debt restructuring and
final settlement of all disputes and claims of 2019, against a liability of Sh115.2 billion, a moratoriums, which will ease pressure on the
both parties in connection with a participating figure likely to have gone up, meaning the company.
interest in OPL 281 previously assigned to listed company is technically insolvent. “At the moment there is no intension by
Efora in October 2006. In her audit of the company, Auditor the government to nationalise Kenya Power.
The resolution of the dispute is significant, General Nancy Gathungu, who took office The government is making sure that there
given that it is one of the legacy issues which in July, notes Kenya Power has remained in a is a recovery process in force with a lot of
the core investor that took over Transcorp in negative working capital position for the third initiatives to wade off insolvency,” Njoroge
2011 inherited, and has been taking steps to consecutive year. told shareholders during the 98th(Virtual)
resolve. Though the board and management Annual General Meeting.
Under the terms of the announced indicate they have been undertaking strategic
settlement, both parties agreed to forgo their initiatives to improve its financial position, the
respective claims against each other and efforts have not yielded the intended results,
discontinue pending lawsuits and arbitration
in relation to their claims. In addition,
Transcorp will pay a total sum of $5.5mn over
a period of 13 months to Efora.
Commenting on the development,
President and CEO of Transcorp Owen
Omogiafo stated: “I am glad that the mutual
understanding that resulted in our partnership
at inception has brought about this win-win
resolution with great potential for future
co-operation. We see this as a significant
development that will pave way for our
planned development and optimisation of the
Oil and Gas asset without legal constraints.
OPL 281 remains a prolific asset that will
contribute substantially to the performance
of the company upon completion of its
development.” On his part, Efora’s CEO
Damain Matroos said: “I am very happy to

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