(Updates with debt-equity mix in first paragraph.)
Oct. 30 (Bloomberg) -- Kenya Electricity Generating Co., the East African nation’s biggest power producer, said it will seek to raise $5.5 billion through a mix of 70 percent debt and 30 percent equity to finance a doubling of its output capacity.
Development finance institutions, export agencies, commercial banks and other lenders will provide about $3.85 billion, while $1.65 billion will come from joint ventures, a rights offer and revenue, acting Chief Executive Officer Simon Ngure told reporters today in the capital, Nairobi.
KenGen, as the company is known, plans to generate 2,500 megawatts of additional capacity over 40 months, representing half of the government’s target to boost installed capacity by 5,000 megawatts by 2017, he said.
“The reason why we need this power is to drive economic growth in this country,” Ngure said.
With the economy growing and the population expanding, electricity consumption in Kenya is rising an average of 8 percent a year. KenGen produces 1,239 megawatts, while four private producers account for the remainder of the countrywide installed capacity of 1,664 megawatts, according to the company.
The state owns about 70 percent of KenGen, which currently relies on hydropower generation that is affected by recurrent drought. President Uhuru Kenyatta said in September the country plans to become more reliant on natural-gas and coal-fired generation to lower costs by as much as six-fold.
East Africa’s biggest economy is preparing to sell its inaugural Eurobond to raise as much as $2 billion by early next year to fund infrastructure development such as power projects.
KenGen is also considering a bond offer and in addition may sell an asset-backed bond linked to geothermal resources, Ngure said. Kenya is Africa’s largest geothermal-power producer.
“We are thinking about a year from now but we need to work on the numbers,” he said. “The size will be driven by the market and the value of the steam.”
The company yesterday announced profit surged to 5.25 billion shillings ($61.7 million) in the 12 months through June from 2.82 billion shillings a year earlier.
That beat the median estimate of three analysts surveyed by Bloomberg, who forecast net income would be 3.36 billion shillings. Revenue grew 4 percent to 16.5 billion shillings.
The shares rose 1.8 percent to 17.35 shillings, the highest since Oct. 14, by 3:46 p.m. in Nairobi. That extends gains in Kenya’s second-best performing stock by 97 percent this year, compared with a 36 percent gain on the FTSE NSE 25 Share Index.
--Editors: Paul Richardson, Sarah McGregor, Dale Crofts