Market News

Kenya Power eyes garage services for revenue boost

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Kenya Power managing director Bernard Ngugi. FILE PHOTO | NMG

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Summary

  • The garage business will be handled by its subsidiary, Kenya Power International.
  • The subsidiary was started four years ago as part of business diversification strategy to create alternative revenue streams.
  • Kenya Power will also lease the idle pieces of land it holds. The firm has six pieces of land in Mombasa, two in Nakuru, Eldoret (two) and several others in Nyeri and Nairobi.

Kenya Power #ticker:KPLC will commercialise its garage and lease out idle land in an attempt to shore up its revenues in the wake of dimming profitability.

Managing director Bernard Ngugi said on Friday the utility firm expects these avenues will diversify revenue streams and support electricity sales.

“We have a transport section and we want to open that as a public garage since it is idle at the moment. We also want to lease out idle land,” said Mr Ngugi without giving the estimated monetary potential of these actions. “The garage sits on huge land and we will liaise with insurers to give us an opportunity to repair vehicles. Going by the growing numbers of vehicles on roads, it is a potential business.”

Mr Ngugi said the garage business will be handled by its subsidiary, Kenya Power International. The subsidiary was started four years ago as part of business diversification strategy to create alternative revenue streams.

Kenya Power will also lease the idle pieces of land it holds. The firm has six pieces of land in Mombasa, two in Nakuru, Eldoret (two) and several others in Nyeri and Nairobi.

The board is also looking at expanding its fibre business that started in early 2010, helping it to sign five to 20-year lease agreements with several telecommunications operators.

“The fibre business gives an average of Sh500 million and we want to incrementally improve on this investment to increase leasing to the telcos. We still believe it is lucrative business and we have started injecting in new capital,” added Mr Ngugi.

Kenya Power had earlier announced that it wanted to grow the fibre network and provide inter-connection from Kenya to the entire Common Market of Eastern and Southern Africa.

The diversification strategy comes at a time Kenya Power’s net profit for six months to December 2019 fell 71.8 percent to Sh693 million marking third straight year of dimming performance.

This was on the back of a 92 percent plunge in net profit to Sh262 million in the financial year ended June 2019, with rising non-fuel costs being the key reason for the performance. Kenya Power made an application to the regulator for an increase in electricity prices by up to a fifth but the government has been hesitant to approve this.