Kenya Power (KPLC) has started valuing its transmission line assets ahead of the sale and transfer to the Kenya Electricity Transmission Company Limited (Ketraco) in line with the Cabinet's order.
The utility firm is responding to the Cabinet’s May decision that will see it give up the transmission assets to Ketraco at market rates to use the proceeds in debt settlement.
Kenya Power is looking for a consultant to offer advice on the transaction and guide the planned valuation to arrive at how much Ketraco will pay.
The two will, after the transfer, enter into a 10-year operations and maintenance (O&M) contract.
“The consultant is to carry out professional valuation, transaction advisory/consultancy services that would assist KPLC obtain market values for transfer of transmission line assets as well as address the wide range of requirements,” says Kenya Power.
“The transfer is to be undertaken on a commercial basis with full market value assets paid to KPLC. In this arrangement, KPLC and Ketraco will enter into a well-structured O&M agreement.”
The assets had been estimated at Sh20 billion but Kenya Power stands to fetch more once the valuation is carried out to capture intangible assets such as goodwill.
Ketraco is a government utility company that manages high-voltage electricity lines and the State sees the transaction as a step towards enhancing efficiency in transmission.
The consultant will value transmission lines, equipment, land, buildings, right of way and common user services, assignments, rights, intellectual property, hosting and colocation licence fees, rentals and goodwill.
Kenya Power owns and operates an electricity distribution and transmission system and sells electricity to more than nine million customers.
The utility firm discloses that it will be transferring equipment to 11 sub-stations—Thika Road, City Centre, Kamburu, Gitaru, Kiambere, Turkwel, Olkaria II, OR-Power, Weru, Ngeria/Selenkei-Cedate and Kipedo Wind — to Ketraco.
Also up for valuation are the fourteen 220-kilovolt transmission lines of 1,090.9 kilometres.
KPLC will also value 10 pieces of land, some of which have been developed by Ketraco. The pieces are in various locations including Nairobi’s industrial area, Kajiado, Thika, Murang’a, Meru, Kisii and Siaya. Also to be valued is the Kisumu depot at the Kisumu Port.
The contract is expected to take 12 months, helping Kenya Power to get the much-needed billions of shillings to restructure its balance sheet.
Ketraco is also expected to acquire the Kenya Electricity Generating Company-owned transmission lines moving power from generating plants to the national grid.
