Kenya Power has acquired a Sh5.1 billion loan from a South African bank to finance the set up of new electricity lines and construction of more substations in the country.
In an interview with the Nation Friday, the companyÃ¢â‚¬â„¢s managing director JosephÃ‚Â Njoroge said the money,
acquired from the Rand Merchant Bank, will be used to finance capital expenditure as the electricity distributor seeks to be more efficient.
Ã¢â‚¬Å“The loan brings in much needed financial support in efforts to complete projects aimed at improving quality of power supply to customers and stabilising voltages to cope with additional demand,Ã¢â‚¬Â he said.
Rand Merchant Bank, the investment banking arm of South African group, FirstRand, set up its office in Nairobi two years ago to target large and medium-sized Kenyan firms as it enters the regional market.
The loan will grow at a rate of 5.25 per cent annually for the next six years.
Kenya Power is also seeking Sh29.3 billion loan from ChinaÃ¢â‚¬â„¢s Exim Bank to finance investment in underground cables in order to reduce transmission down-times.
The loan would increase the debt burden of the electricity distributor to Sh26.7 billion.
Rand Merchant now becomes the third largest lender to the company after Equity Bank, which loaned it Sh5.6 billion.
Others are the World Bank and the Kenyan government with a combined advancement of Sh4.7 billion, the European Investment Bank (Sh3.1 billion) and StanChart (Sh6.4 billion).
Last month, Kenya Power wrote to the Energy Regulation Commission (ERC) to implement a tariff price reviews to raise cash to finance the set-up of more electricity generation plants.
The tariff review, which is yet to be agreed by ERC, would increase the prevailing electricity bills for consumers with the fixed charge poised to jump to Sh200 from the current Sh120 and further to Sh250 in July.
In its latest financial statements, Kenya Power recorded a 35.6 per cent growth in net profit to Sh3.1 billion in the six months to December 2012 compared to Sh2.3 billion recorded in the year before.