Nairobi — The Kenya Electricity Generating Company (KenGen) is planning to use asset backed securities to raise over Sh2.4 trillion through a 20-year bond in order to finance its ambitious geothermal expansion plans.
KenGen Managing Director Eddy Njoroge said that the utility will need an estimated Sh437.5 billion in the next five years in order to deliver adequate power in the face of rapidly growing demand.
"We plan to use the steam - already drilled - as collateral to raise additional affordable capital from the market," he revealed.
"We shall use this capital to build power plants and use the revenue from the sale of power to pay those who have invested in us," he added.
KenGen is set to double current total capacity to 3,000 Megawatts by 2018.
The Managing Director further said that the firm has appointed a financial advisor to guide the company's financial options going forward.
The Asset Backed Securities Regulations of 2007, provide that an originator can transfer an asset which has clear cash flows to a separate institution (a special purpose vehicle, created to handle the securitisation of asset backed securities) and this separate entity would then issue a bond.
The cash flows from the asset would service the repayments of the bond.
Njoroge was speaking in the company of the British Minister for Environment and Fisheries Richard Benyon, who toured the Olkaria geothermal fields and the pioneer geothermal well head generator.
The British Minister noted that KenGen was wise in investing heavily in renewable energy.
"I am very impressed with what I have seen here today. What's most appealing is that all this is green and renewable energy. Such development is both stable and sustainable," he said.
His delegation, which included officials from the British High Commission in Kenya, also toured the Natural Sauna and Spa being constructed by KenGen in Olkaria.
The geothermal-based facility to be completed in April this year is the largest in the African continent.
Njoroge also revealed that the utility has a Memorandum of Understanding with the Kenya Wildlife Service regarding the Olkaria geothermal field, which is housed within the Hell's Gate National Park to ensure the delicate eco system of the area is maintained.
"Further, we always conduct comprehensive Environmental and Social Impact Assessment Tests as well us work closely with NEMA to ensure our projects have minimal impact on the environment," he said.
"We appreciate that we must strike a balance within supplying the so much needed electricity while conserving the environment," he emphasised.