Kenya Power minority shareholders get 4 slots on board

Kenya Power's Board Chairperson Joy Brenda Masinde and Managing Director and CEO Dr Joseph Siror during Kenya Power Extraordinary General Meeting at Stima Plaza on Nov 9, 2023. [Jonah Onyango, Standard]

Kenya Power's minority shareholders will elect four directors to represent their interests in the company's board when the power distributor holds its Annual General Meeting next month.

The shareholders on Friday approved amendments to Kenya Power's memorandum and articles of association, which gives them four slots in the board while reducing the government's slots to five.

The changes were approved during an extraordinary general meeting held yesterday.

"The amendments, key among them the restructuring of the board of directors, were proposed to safeguard the interests of minority shareholders, in line with good corporate governance practices and the government's transformative growth agenda," said Kenya Power.

"The amendments will provide a mechanism for appointing directors to fairly reflect the company's shareholding structure. Currently, the government holds 50.09 per cent of the company's shares. In line with the approved amendments, the government, which is the majority shareholder, will appoint five directors while the remaining shareholders will elect four directors."

This will mean that during the firm's AGM set for December, minority shareholders will vote for their preferred board directors as opposed to the current scenario where all the directors need to have government backing during elections.

In addition to the State's 50.09 shareholding, the remaining half is owned by more than 31,700 shareholders, including individuals and institutions, according to Kenya Power's annual report for the year to June 2022.

"Beginning this year at our AGM, we will see the shareholders electing, independent of the government vote, four new directors or four continuing directors, as they decide, to serve on the board," said Kenya Power Chairperson Joy Brenda Masinde, adding that the government will not participate in the voting of the directors representing the minority shareholders.

That way, she said, "the directors elected will be the direct nominees of shareholders."

The restructuring of the power utility is part of the reforms approved by the Cabinet in May this year that are expected to set the firm on a firm growth path.

Other than the government easing control through the inclusion of minority shareholders in the company's board, the restructuring is also set to see the firm transfer its high voltage transmission lines worth an estimated Sh20 billion to the Kenya Electricity Transmission Company (Ketraco).

As part of the reforms, Kenya Power, together with Ketraco, is expected to reduce electricity system losses to 14 per cent from 22.4 per cent.

Proceeds from the sale of assets to Ketraco will be used to settle some of Kenya Power's debts that have been on-lent by the government.

The restructure will also see Kenya Power freed up from undertaking development initiatives such as rural electrification, which will now solely be undertaken by the Rural Electrification and Renewable Energy Corporation (Rerec). Where Rerec will engage Kenya Power, it will be under a commercial arrangement.

"The changes are aligned to the government's commitment to transform Kenya Power into a commercially viable entity, by delinking development initiatives, to allow the company to operate on commercial principles," said the firm.

In approving Kenya Power's restructuring back in May, the Cabinet also noted that the government would also pay the electricity distributor money owed by Rerec, which amounted to Sh19.4 billion for the work that Kenya Power did on behalf of the corporation.

Kenya Power posted a Sh3.19 billion net loss for the year to June 2023, which was on account of currency fluctuations.

This is compared to a net profit of Sh3.2 billion it reported in the financial year ending June 2022 and Sh1.49 billion in the year ending June 2021.