Kenya Power is negotiating repayment terms of two dollar-denominated loans estimated at Sh6 billion in a bid to ease the increasing headache of debt servicing amid the weakening of the local currency.
The firm’s Chief Financial Officer, Stephen Vikiru Monday said that negotiations are at an advanced stage to strike fresh repayment terms in the next two months.
The move to renegotiate the terms of the loans comes amid a forex crisis that has hit the economy and ballooned Kenya Power’s commercial foreign debt by at least Sh2 billion since the start of the year.
Mr Vikiru did not disclose the names of the lenders but company disclosures show that Kenya Power had three dollar-denominated commercial loans worth Sh29.9 billion in June last year.
“We will complete the refinancing of two facilities that are in US dollars in about two months’ time. They (loans) are the equivalent of Sh6 billion,” Mr Vikiru said yesterday.
“In the short term, we are refinancing commercial debt that is on foreign currency, we are closing in on that but there are approvals that we need to obtain, like from the Ministry of Energy.”
Kenya Power’s biggest dollar-denominated commercial loan is a Sh23.01 billion facility owed to Standard Chartered Bank, whose maturity date is June 2026.
It has an interest rate based on the London Interbank Offered Rate (Libor) –a global benchmark— plus a 4.15 percent margin. The other two are a Sh4.77 billion facility owed to the Rand Merchant Bank of South Africa and Sh2.21 billion to Equity Bank.
The Rand Merchant Bank facility has an interest rate of 7.95 percent while the Equity Bank loan is priced on the Libor plus a 4.5 percent margin.
The two loans will mature in September 2025.
The utility’s debt portfolio stood at Sh101.84 billion as at June last year, with the commercial loans accounting for 38.2 percent or Sh39.73 billion while Sh64.11 billion are on-lent borrowings.
The shilling hit a new all-time low against the greenback of 145 units last week and major users of the dollar, including Kenya Power are grappling with a shortage of the currency, further compounding the debt headache.
