This archive report was first published on 26 August 2019.
Kenya Power, the electricity distribution monopoly, has signed a Sh379 million deal with four auto dealers to supply a fleet of vehicles.
The deal, which was approved in July, will see Toyota Kenya supply vehicles worth Sh241.54 million, Simba Corporation Sh34.4 million, Simba Caetano Formula Sh52.66 million, and Isuzu East Africa Sh51.26 million.
The move comes as the firm seeks to improve its financial position, which has been strained due to a breach of loan terms worth Sh59.6 billion.
Kenya Power has been seeking to secure fresh short-term loans to refinance similar debts on a longer tenor, and has also frozen the signing of new power purchase agreements indefinitely due to financial constraints and excess capacity.
According to the firm's financial reports, revenue rose by 4.23 percent to Sh125.8 billion in the year ended June 2018, but power purchase costs, excluding fuel and foreign exchange, increased by Sh2.59 billion to Sh52.79 billion in the period.
Acting chief executive Jared Othieno did not respond to queries on whether the vehicles deal was a purchase or a leasing plan, but the firm has opened talks with its creditors to extend the payment period for segments of its loan obligations maturing in the current financial year.
"We are beginning to renegotiate part of the loans and convert them into long-term debt to bridge the negative liquidity gap," Othieno said.
