KenGen MD resigns before end of his tenure

A shareholder peruses a document during KenGen’s AGM at Kasarani Gymnasium on November 28, 2012 where MD Eddy Njoroge announced his resignation. Photo/DIANA NGILA
A shareholder peruses a document during KenGen’s AGM at Kasarani Gymnasium on November 28, 2012 where MD Eddy Njoroge announced his resignation. Photo/DIANA NGILA  Nation Media Group

KenGen managing director Eddy Njoroge Wednesday resigned from the helm of the state-owned power firm for undisclosed reasons, ending an executive career that spanned nearly a decade.

Mr Njoroge, 60, told shareholders at the firm’s AGM that he had opted to cut short his third five-year term, which will come to an end in March 2015, and suggested his exit was based on the government’s retirement age of 60 years.

He said the electricity generator will in January launch the search for a new CEO in time for his retirement in June 2013.

“I believe that 10 years is sufficient time for one to make a difference in an institution… these events in my life have convinced me that now is time to exit the cockpit in favour of a new captain,” said Mr Njoroge, adding that he reflected on his tenure after turning 60 two days ago.

“The search for my replacement will begin in earnest in January 2013 and hopefully by March we will have a designate CEO ready to take over from me on July 1, 2013.”

Mr Njoroge was first appointed MD of KenGen in March 2003 and will be best remembered for shepherding the firm’s IPO in 2006, which is credited with ushering retail investors to the Nairobi Securities Exchange (NSE).

The government sold its 30 per cent stake in the firm through the IPO that raised over Sh26 billion against a target of Sh7.9 billion.

It was after this eye-opening investment that a vast number of retail investors, including those with little knowledge of stock market trading, made their debut.

“He quit for undisclosed personal reasons. It has nothing to do with the retirement age since we gave a new five year contract that was to run beyond the 60 years,” said a KenGen director who sought anonymity because he is not the board’s spokesperson.

KenGen’s profit stood at Sh2.4 billion in 2007 and rose to Sh3.2 billion in 2010 before slipping to Sh2.8 billion in the year to June.

His exit comes in a year when the electricity producer raised its dividend payout 20 per cent after the net profit grew by more than a third in the year to June on increased sales.

Lack of cash

This helped it raise its dividend to Sh0.60 a share from Sh0.50, a payout it has maintained since 2008.

The share has increased 5.95 per cent over the past year to Sh9.80, which is below its 2006 IPO price of Sh11.90. Most counters at the Nairobi bourse have risen by double-digits over the past 12 months.

Mr Njoroge has seen the generation capacity of KenGen increase to 1,232 megawatts from 780 in 2003 and is targeting 1,750 MW in 2015 with an emphasis on renewable power, especially geothermal.

Lack of cash has made it difficult for KenGen to build new power plants to match the growing demand for electricity, promoting the state-owned firm to increasingly consider joint ventures to match government’s objective to add 1,500 megawatts of new power capacity by 2019.

Currently, Kenya faces constant power blackouts as demand for electricity continues to outpace supply. The country’s power deficit is below four per cent against the set optimum level of 15 per cent.

His exit comes in a year when corporate Kenya has witnessed a high CEO turnover.

Already this year, 11 chief executives of firms listed at the NSE have left or planning to leave the corner office, both voluntarily and not, making it one the highest CEO turnover in the history of the NSE.

Announced departures so far in 2012 includes some of Kenya’s best-known companies in the finance and manufacturing sectors: Mumias Sugar, KCB Group, and National Bank of Kenya.

Others are East Africa Breweries Limited, CFC, tyre maker Sameer Africa, book firm Longhorn, and investment firm Olympia Capital.
And the names include KCB’s Martin Oduor-Otieno, Evans Kidero, Reuben Marambi, and Adan Mohamed.