State ups its stake in KenGen to 74pc

The Government has increased its shareholding in the Kenya Electricity Generating Company (KenGen), firming its majority owner's grip on the power generator.

The State's shareholding increased to 73.92 per cent as of June 2016 from 70 per cent in June 2015, after a rights issue in June this year. The National Treasury, which holds the Government ownership in KenGen, converted a Sh20.2 billion debt into equity, which had the effect of pushing up its shareholding. Treasury now owns 4.62 billion shares out of the total 6.24 billion shares.

At the same time, the stake of minority shareholders in the company has been substantially diluted, after the rights issue. KenGen, in its annual report for the year to June 2016, said the over 192,000 shareholders held a 14 per cent stake by close of the financial year, compared to 26.78 per cent that was in their hands as of June 2015.

The rights issue raised Sh26.4 billion that the company said would be invested in construction of power generation projects.

KenGen Chief Executive Officer Albert Mugo said the company is in plans to add 721MW of electricity from geothermal and wind sources to the national grid in the next five years at a cost of $8.1 billion (Sh800 Billion). Mugo, who spoke Wednesday during the firm's 64th Annual General Meeting (AGM) in Nairobi, said the company had already secured some funding from development partners and internal resources while other financing opportunities are being explored.

During the AGM, KenGen's management and board were hard pressed as minority shareholders sought to understand why they would not be getting a dividend for the last financial year. KenGen reported a net profit of Sh6.7 billion for the year to June 30. This was, however, a decline compared to Sh11.5 billion it made in the year to June 2015.

The shareholders felt short-changed, noting that despite the decline, the firm had reported a decent profit, of which they deserved a share.
KenGen, which has a policy to give a third of net profits to shareholders as dividends, said it planned to plough back the profits into the business, in particular the power projects it is implementing.

KenGen Board Chairman Joshua Choge sought to reassure the shareholders that the sacrifice made this year would in a few years pay off with major capital gains on their current investments. "We have a pipeline of projects that we are implementing... these projects will see the value of your investments grow and the dividends will also be higher," he told the shareholders.

"We will not give a dividend this year because the board has seen an opportunity for growth where we are going to invest. This is a temporary situation... be patient with us and we are guaranteeing you that we will grow your assets and give you a better return."

He added that that the dividend policy had not changed and that the firm would resume paying dividends to shareholders but did not give any timelines. During the AGM, Phyllis Wakiaga was appointed to the KenGen board. Ms Wakiaga is the CEO of Kenya Association of Manufacturers (KAM).