KenGen – Kenya Electricity Generation Co

45 MW Olkaria I geothermal power plant, Kenya (source: bgr.bund.de)

Alexander Richter 8 Apr 2010

In a piece on KenGen the following description is provided about the Electricity Generation Company of Kenya, which was formed in 1954. The company today has about 1,500 employees and revenues of US$1 billion. (company website)

“The company is involved in the large scale development and operation of hydroelectric and geothermal power stations. The Company was listed in the Nairobi Stock Exchange in 2006 and is now 30 percent privately owned and 70 percent Government owned.

KenGen provides a total of 80 percent of all electricity consumed within Kenya – it is the leading electric power generation company in the country. The company uses various sources of energy to generate electricity ranging from hydro, geothermal, thermal and wind. Hydro is the leading source, with an installed capacity of 677.3MW, which is 72.3 percent of the company’s installed capacity.

KenGen has a workforce of 1500 staff located at different power plants in the country. With its wealth of experience, established corporate base and clear vision, the company intends to maintain leadership in the liberalized electric energy subsector in Kenya and the Eastern Africa Region.

Projects on the Table: There are a lot of projects on the table for the firm. Director Simon Ngure says: “We wanted to make sure we could move KenGen forward and make it sustainable. We therefore envisioned the Good to Great Transformation.”

The company used a similar approach as in the book with the same title written by Jim Collins and adopted the principles outlined in it. “We advertised for the top positions, and we recruited six Executive Directors. After that we went out again across the country to recruit managers,” says Ngure. And following that the COOs were recruited. The company has gone on to a migration of the rest of the staff to a new structure. But what of this structure?

“The new structure is process based with six directors and all the operations are on the process base,” says Ngure. “So because of that KenGen has been able to improve its capacity to implement projects. And that has become a major enabling point in the company’s functions.”

Now the firm is able to do very integrated planning, and implement additional projects with additional revenues.

The company is planning a 280MW geothermal project, with a total cost $1.3 billion. “We in to support these initiatives,” explains Ngure. “We have completed the appraisal missions with some of the financiers.”

Leaders at the company expect that KenGen will have improved its capacity by about 400MW between today and the next four years. This represents a major strength in that KenGen will have improved its capacity to generate power from about 1000MW to 1500MW.

“This is a direct result of the restructuring and internal transformation that KenGen has gone through in the last three years,” says Ngure. Capacity to bring in additional finance is a major strength. “It was a problem initially to get financing for projects, now we are able to do this both from the international market and the local market,” Ngure adds.

“In the six year horizon, we are also planning to do a 600MW coal plant for which we have identified a joint venture partner. We expect that we shall be able to form the joint venture and proceed to do this project for commissioning by 2015” says Ngure.

KenGen has a staff contingent of about 1500 people, and has transformed into a much flatter structure which has only 5 levels. Headed by the Managing Director and Chief Executive Officer, level 1 has six Executive Directors, level 2 has Managers, level 3 has Chief Officers and level 4 all the rest of the management staff. Level 5 is all the union staff.

“We have gone to a much flatter structure because before that we had over 15 tiers,” says Ngure. “This flatter structure has reduced bureaucracy and it has also improved teamwork. We are also using a new performance monitoring tool.”

Kenya as a country has plans to import power to Ethopia. “We are building as a country a transmission line to inter-connect the two countries – when that is finished in 2013, we expect that Kenya will be importing energy from Ethopia,” says Ngure.

“Nevertheless it is clear that importing power from other countries is still not a very cheap option but it is a better option compared to the generation of power using thermal power stations. KenGen has adopted a geothermal strategy and this strategy will see KenGen develop approximately 280WW of energy from the year 2013. Going forward, it is envisaged that up to 140 MW will be installed from geothermal resources every year for the next 8 years from 2014.”

It is an incredible vision, and testament to the success of the company now and the success it will surely achieve in the future that this vision will be implemented. Power in Africa is in a changing state, and this company really is at the forefront of the power business on the continent. We wish the firm all the very best indeed for the future.”

Source: African Business Review