Nairobi — The Energy ministry on Tuesday announced it would be seeking to acquire a controlling stake in Kenya's only electricity distribution company.

Energy minister Kiraitu Murungi and Permanent Secretary Patrick Nyoike told the Parliamentary Committee on Energy, Information and Communication discussions on the two-part process are on.

He said the government is bidding to increase its shareholding in Kenya Power and Lighting Company by converting its preferential shares worth Sh16 billion into ordinary shares.

It will then increase its shareholding to 75 per cent and then attempt to raise Sh10 billion via a rights issue, with the final result being ownership of 51 per cent of KPLC.

The Sh10 billion will go into the development of infrastructure, he said, and the government will then have a controlling stake in the company's affairs that will enable it guide its development.

Their statements came as KPLC came under fire for declaring a Sh2.8 billion profit for the year ended December 2009 despite rising electricity prices and protests by industries who say they are likely to close due to the high costs of power.

KPLC was accused of concentrating more on making a profit than delivering services, which the MPs said is the body's core mandate.

"A healthy balance sheet to KPLC is a sickness to the customer," said Turkana Central MP Ekwee Ethuro, who said the cost of power would affect the country's productivity as proved by studies by the World Bank.

The government owns 48 per cent of the company, with the rest in the hands of shareholders and this had made matters a bit complicated for KPLC.

"In walking that tight rope, KPLC has done well. But the government is not interested in making profit but the provision of modern services to our people," said Mr Murungi.

Mr Murungi admitted KPLC's dual mandate as a public listed company and a provider of services had placed it at a crossroads as the shareholders demanded profits and the government services.

But he asked the committee members and the public to "look beyond the figures" and KPLC to communicate its affairs better to erase the bad perception.

The cost of power has increased rapidly over the past two years, and apart from the public outcry, manufacturers and factory owners have raised their concerns about the cost.

The Energy minister said he had received letters from industries on the matter, the latest being a glass maker in Mombasa and a tyre manufacturer in Nairobi's Industrial Area.

Both said they are likely to shut down soon due to the high cost of electricity.

KPLC's profit for the year ending December 2009 increased by 31 per cent from Sh2.1 billion to Sh2.8 billion. The body's chief executive Joseph Njoroge attributed the profit to increased revenue and reduced costs.

He said of the amount, only Sh238 million would be paid to shareholders, with the rest being ploughed back into the company. Mr Njoroge said the profit was low at 80 cents for the Sh8 it sells each unit of power for- it sold three billion units of power last year.

Public anger has also increased as Kengen, the generating company, has said water levels at the Seven Forks dams have not reached optimum levels despite the current rains.

This means that until the dams are full, and the emergency power generators are still on, Kenyans will continue to pay high power bills, which stem from the fuel adjustment costs for the diesel-powered generators.

Mr Ethuro commended the move to have the government's share increased with committee chairman James Rege asking the company to speed up the development of parallel systems to manage its networks.

Mr Rege said KPLC should guard against incidents in the past that resulted in countrywide power blackouts by developing what are known as redundant systems.

The current system is such that a fault at one of the generating stations triggers a shut-down of the entire, plunging the entire country into darkness as happened last January and November.

In the November incident, the company said a fault in the electricity line linking Kamburu and Dandora power substations set off a chain reaction that triggered the countrywide blackout.

The next outage in January was attributed to the sensitive thermal generators, which shut down at the slightest fault in the system. The thermal generators are operated by Independent Power Producers, who were contracted to supply power after dams were shut down when water levels become too low.