Windmills for generating electricity at Ngong near Nairobi. Photo/File
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The power firm plans to increase its capacity to 3,000 megawatts, from the current 1,183MW, by 2018 to meet growing electricity demand amid robust economic activity, according to a proposal it has sent to top banks.
The company said that the financial advisor and arranger would “execute the financing plan to assist KenGen in identifying, designing, executing a suitable financing programme incorporating both debt and equity capital for its capacity expansion.”
The proposal was sent out in June and closed on July 27, with the winner expected to be picked on November 1.
The proposal states that KenGen is looking at a mix of financing options, including a syndicated loan, joint ventures, public private partnerships, as well as local and international bonds.
KenGen’s total borrowing stood at Sh64.1 billion in the year ended June 2011 compared to Sh59.6 billion the year before.
Power producer KenGen is looking for an adviser to help it secure financing worth $5 billion (Sh420 billion), through debt and equity, for new electricity plants.
The power firm plans to increase its capacity to 3,000 megawatts, from the current 1,183MW, by 2018 to meet growing electricity demand amid robust economic activity, according to a proposal it has sent to top banks.
The financing, which will be staggered over a six-year period, will be the biggest fundraising plan by a single company in corporate Kenya.
“KenGen is therefore soliciting proposals from qualified firms to provide the services of a financial advisor and arranger,” KenGen said in its request for proposals seen by the Business Daily.
Kenya faces constant power blackouts as demand for electricity continues to outpace supply in what has cut the country’s power deficit — the difference between consumption and electricity generated — to below four per cent against the set optimum level of 15 per cent.
The company said that the financial advisor and arranger would “execute the financing plan to assist KenGen in identifying, designing, executing a suitable financing programme incorporating both debt and equity capital for its capacity expansion.” The proposal was sent out in June and closed on July 27, with the winner expected to be picked on November 1.
The proposal states that KenGen is looking at a mix of financing options, including a syndicated loan, joint ventures, public private partnerships, as well as local and international bonds.
“The company targets to maintain a corporate leverage ratio of 70 per cent debt and 30 per cent equity,” KenGen said.
KenGen’s total borrowing stood at Sh64.1 billion in the year ended June 2011 compared to Sh59.6 billion the year before.
Companies seeking advisors to raise large capital have traditionally relied on international financial services firms with local operations.
Some of the firms fitting this profile include Standard Chartered Bank, Barclays Bank, and CFC Stanbic Bank which are subsidiaries of large international banks that are strong in financial advisory and big-ticket lending.
The company had earlier said that the government, its biggest shareholder with a 70 per cent stake, was willing to sell part of its shares to a strategic investor to help fund the expansion plan. KenGen was previously fully-owned by the government.
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