Nairobi — Kenya Electricity Generating Company (KenGen) shareholders have approved plans by the company to raise new capital to finance power projects in 2014.
This will see the company issue 2.2 billion shares in the market to raise approximately Sh30 billion through a Rights Issue before June next year.
The company has a total of 2.2 billion shares listed at the Nairobi Securities Exchange (NSE) meaning that the Rights Issue would be in the ratio of 1:1.
Ultimately, KenGen plans to raise its share capital from Sh5.5 billion to Sh25 billion through creations of 7.7 billion new shares.
The 2.2 billion new shares approved on Friday is the first tranche in the capital raising project by Kenya's largest electricity producer seeking to raise Sh350 billion for new projects over the next four years through a mix of debt and equity.
The Rights Issue is expected to finance new projects comprising mainly a mix of geothermal and wind energy, is expected to boost KenGen's power generation capacity by 400 MW in 2014.
These include Olkaria IV, Ngong Wind, Geothermal mobile wellhead and a 70 megawatt additional plant at Olkaria I.
The firm is targeting to increase its power output to 3,000MW by 2018 from the current 1,239 MW.
KenGen acting CEO Simon Ngure told shareholders at the company's 61st Annual General Meeting (AGM) in Nairobi, that the company requires cash quickly to fund its ambitious capacity expansion programme.
"We are growing our business very quickly and therefore need more money. KenGen will grow to three times its size over the next three years. It is a necessity that if you take debt, then you must ensure you have adequate equity," Ngure said.
He added that the projects will be financed through a 70:30 debt-to-equity ratio.
In 2008, KenGen launched a major capacity expansion programme stretching over three horizons to 2018.
KenGen outgoing Chairman Titus Mbathi said the company was on course to realizing its target of increasing capacity in line with rising demand as the country implements the Vision 2030 plan to create an industrial economy. Stable and affordable supply is critical to achieving this goal.
Shareholders approved the directors' recommendation for a Sh0.60 per share dividend during the AGM.
Mbathi announced his retirement during the AGM together with two directors, Musa Ndeto and Mary Michieka.