The Kenya Electricity Generating Company will have to spend at least Sh170 billion annually over the next 17 years to meet the country’s projected power demand and to help in the attainment of Vision 2030.

According to KenGen’s outgoing managing director, Mr Eddy Njoroge, local demand for power is projected to hit

17,000 megawatts by 2030, when the country is expected to have transformed into a middle income society.

Of the total, about 1,000MW will be generated from geothermal sources, 5,000MW will come from hydropower while 4,500MW will be from coal and gas.

The country will import 2,200MW of hydropower and generate about 1,600MW from wind.

“To achieve the company’s expansion plan, significant funding is required at the lowest practicable cost and to get an optimum mix of internal and external financing,” said Mr Njoroge.

According to Mr Njoroge, Kengen’s biggest headache now is how to raise these funds.

In total, it is required to spend not less than Sh3.23 trillion over the next 17 years.

The company has now announced plans to issue a Sh30 billion 20-year bond to finance additional energy production.

In November 2009, the power producer issued a 10-year public infrastructure bond (PIBO) to raise Sh25 billion.

Approve harmonisation

The company is now asking the current bond holders to approve the harmonisation of the Debt Service Coverage Ratio (DSCR) from 1.5 to 1.3, effective from year three till maturity date of October 31 2019, a proposal that some investors opposed.

According to analysts, this will allow the company to use the cash inflows available to pay debt instead of exhausting its earnings in financing its debt obligations.

The move is also expected to improve the power producer’s prospects in attracting investors.

Mr Njoroge ruled out the possibility of exploring nuclear energy in meeting the energy demand following the discovery of oil and gas in the country.

“We had thought of exploring the nuclear energy option, but that may not happen if we get enough oil and gas,” Mr Njoroge said.

Despite the fact that the country has over the years been increasing its power generation capacity, the cost of power remains high to the consumer.