KenGen in need to get creative on raising funding for development
With its ambitious geothermal development, KenGen seems to find it challenging raising the necessary funds looking at creative ways to improve its funding situation.
Over the years, we reported on several ways of how Kenya Electricity Generating Company is trying to raise the necessary funding for its ambitious geothermal development plans. So it might not be surprising to hear this again.
The Daily Nation reports on KenGen now seeking alternative sources of funding for its key projects that would an additional 511 MW to the national power grid in Kenya.
So beyond the development of a geothermal spa, the planning of an industrial park, KenGen now also seems to be looking at offering commercial drilling services and consultancy.
For the development of new projects, KenGen needs to raise Sh 180.25 ($1.75 billion). Of the planned 511 MW in new capacity to be built, the development of the first part of 140 MW is to start next year.
In the Daily Nation, KenGen’s Managing Director Albert Mugo said, that KenGen has “several financing options but the choice will depend on the advice we get from our transaction advisors.”
Utilising two idle drilling rigs, KenGen raised about Sh824 million ($8 million) from a geothermal drilling contract with a private investor, drilling two wells within the Olkaria area. KenGen further has provided some consultancy services on geothermal development in Rwanda, Sudan and Comoros. While the geothermal spa has been operational since last year, feasibility studies for the industrial park and container freight station are ongoing.
KenGen is also targeting to raise Sh30 billion ($290 million) from a planned rights issue to fund new projects.
Sources privy to the talks between KenGen and the government said the latter has settled on converting debt into equity, a move that will reduce KenGen’s liability.
As at the end of the last financial year, KenGen’s debt comprised Sh39 billion ($380 million) direct borrowings from financial institutions, Sh41 billion ($400 million) in government guarantees to KenGen and Sh64 billion ($620 million) worth of loans from bilateral lenders.
Source: Daily Nation