This archive report was first published on 6 August 2020.
Published on August 6, 2020, Kenya Power has secured debt relief from 14 lending institutions, aiming to reduce interest costs amidst dwindling revenues.
The power distributor has been granted a one-year moratorium on its foreign loans, with the possibility of extension. This move is expected to provide relief to the company, which has 18 foreign commercial and guaranteed loans.
According to Kenya Power MD Bernard Ngugi, the government has helped negotiate a one-year moratorium on the on-lent debt, which can be extended. The company is also in talks with a financier to take on its commercial debt of approximately Sh60 billion, allowing it to convert it to a longer period and gain fresh momentum to recover.
Kenya Power's debt relief on foreign loans will be instrumental in addressing its government-backed external debt, which stood at KSh 44.7 billion in 2018, sourced from lenders like the China Exim Bank, Japan Development Bank, and the World Bank's International Development Agency (IDA).
The company is also exploring a debt restructuring program with Stanchart, Equity, and other commercial lenders. Additionally, Kenya Power is facing high costs of purchasing electricity, which increased by Ksh 18 billion last year to Ksh 70.9 billion.
Kenya Power is in discussions with the Energy and Petroleum Regulatory Authority (EPRA) to increase electricity prices by 20%. If successful, consumers using less than 100kWh a month will pay Ksh 12.5 per unit, while those using more than 100kWh will pay Ksh 195.3 to cover the cost of buying wholesale electricity and maintaining the national grid.
