Kenya Power is set to transfer all its transmission assets to the Kenya Electricity Transmission Company (Ketraco) by December 2024 as part of the measures to return the utility to profitability.
The Treasury disclosed to the International Monetary Fund (IMF) that Kenya Power, in which the State has a 50.1 percent stake, will relinquish its transmission assets to the fully State-owned Ketraco to offset its debts to the latter and the government.
“In line with the Action Plan, KPLC will by the end of December 2024, transfer all transmission assets/lines to Kenya Electricity Transmission Company and pay through the use of on-lent loans from the government upon valuation,” the Treasury told the IMF.
This is among the measures aimed at pulling Kenya Power from the debt hole and returning it to profitability after years of loss-making that often occasioned government bailouts.
It, however, deviates from the previous plans by Kenya Power, which was to transfer only a few of its transmission assets equivalent to the debt owed to Ketraco and its loans from the government, not all its assets as the Treasury told IMF.
Kenya Power owes Ketraco about Sh2.5 billion while its on-lent debt to the State—loans the government took on behalf of the utility—are currently estimated at Sh83 billion.
Kenya Power managing director Joseph Siror told the Business Daily last year that the company was awaiting valuation of the assets before it could initiate the transfer to Ketraco, adding that it would only hand over assets whose value is equivalent to debt.
“The on-lent loan was about Sh64 billion, but because the loan is dollar-denominated, we may be looking at about Sh83 billion. That is the value of assets that we intend to dispose of. At the point where we will hit this target, we will draw a line there on the transfer,” said Mr Siror.
The assets that Kenya Power had earmarked for transfer include equipment in 11 substations, two plots of land on which some substations sit, 1,090 kilometres of transmission lines, portions of its land developed by Ketraco and a depot in Kisumu.
Kenya Power is one of the State-owned enterprises that has faced multiple financial challenges, including problems with debt-servicing in the recent past, forcing them to rely on the Treasury bailout.
The implementation of the Action Plan the Cabinet approved last year, which proposed the transfer of the transmission assets in 2021, is, however, improving its liquidity position, the Treasury told IMF in disclosures on efforts to turn around the utility firm.
