the kenya power & lighting co. ltd investor briefing · pdf filethe kenya power &...

The Kenya Power & Lighting Co. Ltd. INVESTOR BRIEFING

By

The Kenya Power & LightingThe Kenya Power & Lighting Company Limited

Date: 8th November 2010

The Kenya Power & Lighting Co. Ltd.

KPLC OverviewKPLC Overview

Company Strategy

Financial Highlights

Transaction structure

Conclusion

KPLC at a GlanceThe Kenya Power & Lighting Co. Ltd. KPLC is a Kenya‐based company, engaged in the

transmission distribution and retail of electricitytransmission, distribution and retail of electricity.Purchases electricity in bulk from Kenya Electricity Generating Company Limited (KenGen), g p y ( ),Independent Power Producers (IPPs), Uganda Electricity Transmission Company Limited (UETCL) d T i El t i S l C Li it dand Tanzania Electric Supply Company Limited

(TANESCO).Manages an electricity network of more thanManages an electricity network of more than 30,000 kilometers. Operates in four major administrative regions, p j g ,including Nairobi, Mount Kenya, Coast and West.

Investment Rationale in the Energy Sector

The Kenya Power & Lighting Co. Ltd. Electricity demand drivers

L t ti l k t d t t l Large potential power market due to current low population connectivity vis an viz the size of the economy est. at 25%.

Economic recovery & expansion to sustain growth in energy consumption

P d il li d d t f LProposed new railway line and second port of LamuProspects of oil and natural gas discovery in Isiolodistrictdistrict

Booming construction and tourism sectorsOngoing mining projects e.g. Tiomin, gold in Transmara

Investment Rationale in the Energy Sector

The Kenya Power & Lighting Co. Ltd. Development in the power subsector

Increased Government involvement & investment in Increased Government involvement & investment in power infrastructural development e.g. creation of Ketraco, Energy Scale Up Programme targeting 1million new households in the next 5 yrs at cost of Shs. 84 billion

Progression of Regional Interconnection projects withProgression of Regional Interconnection projects with neighboring countries e.g. Southern Africa Power Pool, Ethiopia

Public private partnership framework to facilitate procurement on new projects that augment capacity e.g. geothermal, wind g g ,

Supply and Demand Situation in Kenya


Indicator 2007/08 2008/09 2009/10Indicator 2007/08 2008/09 2009/10

Peak Demand MW * 1,036 1,072 1,107

ll d **Installed Capacity MW ** 1,310 1,345 1,473

Effective Capacity MW ** 1,267 1,280 1,416

Reserve Capacity Margin % 12% 9% 15%

Note: * Current peak demand is 1,132 MW recorded in October 2010.

**Includes 60MW of Emergency capacity in 2009/10.



Company Strategy



Conclusion

KPLC’s Key Strategic Pillars


Diversification & Innovation PillarAlt ti f l

KPLC’s Achievementsleasing out extra capacity to licensed telecommunication operators Signed Alternative sources of energy e.g. solar,

wind, geothermal, wavesFiber Optic BusinessPrepayment & prepaid serviceSt t i lli d ll b ti ith

telecommunication operators. Signed contract to generate revenue of Shs 200 m pa projected to grow to Shs 500 M pa by 2014the infrastructure for data services andStrategic alliances and collaboration with

other service providersthe infrastructure for data services and internal telephone services – est. cost saving Shs 64m p.a.

Robust Network/Infrastructure PillarT&D system expansion & reinforcementT&D t t ti d h i ti

KPLC’s AchievementsConstruction of over 16,000 km of T&D.I l t ti f tT&D system automation and mechanization

Mechanization & automationSecuring the network against vandalismOutsourcing construction capacityI b ild d d i th T&D t k

Implementation of system reinforcement substationsAnti power theft campaignUse of dry transformers to reduce andalismIn build redundancy in the T&D network

Adopting new & emerging technology vandalismAutomatic meter reading for 4,000 large customers

KPLC’s Key Strategic Pillars


Adequate & Secure Sources of Power PillarCost efficient sources of power

KPLC’s AchievementsNet increase of 330MW in effective Cost efficient sources of power

Optimizing generation mix (Hydro, Geothermal, Thermal, Wind, Imports)Promoting Green EnergyRegional Power Pool i e Interconnection

capacity excluding emergency plants 5 power plants with a capacity of 400MW –negotiations in the final stages

Regional Power Pool i.e. Interconnection and energy trading with neighboring countries.

Customer Service PillarTimely connectionsRoll out of pre paid service

KPLC’s AchievementsIntensified marketing e.g. Umeme Pamoja Group schemesNew customers connection policyRoll out of pre‐paid service

Timely response to customer complaints & queriesEstablish customer service centers/national call centre

New customers connection policyImplementation of customer charter and service delivery standardsSMS alerts to warn customers of pending disconnection and bill enquiry via SMScenters/national call centre

Improve meter reading & billingdisconnection and bill enquiry via SMSRoll out of prepaid metering – over 300,000 meters to be implemented in Dec 2010

KPLC’s Strategic Pillars


Financial PillarEfficient use of resources

KPLC’s AchievementsRevision of KenGen & Iberafrica bulkEfficient use of resources

Cost control managementTechnical & commercial loss reductionEfficient revenue collectionCapital Base Restructuring

tariff;Capital base restructuring currently inprogressSystem efficiency increased from 81% toCapital Base Restructuring

Affordable sources of investment capitalEffective pricing

y y84%

Human Resource PillarContinuous Training

KPLC’s AchievementsOrganizational cultural changeRebranding of KPLC redefinition ofg

Retention of motivation of quality staffTalent pool buildingInspirational leadershipCulture Change

Rebranding of KPLC – redefinition ofvision, values, core values etc.

gProductivity & performance management

KPLC’s Strategic Pillars


Corporate Social Responsibility PillarKPLC’s Achievements

I l t d S d GCorporate Social Responsibility PillarGive back to the societySupport government on socio‐economic initiativesPromote use of green energy

Implemented Sound Governance Practices.Recognized as the Company with thebest Governance Practices – Fire AwardsParticipated in National AfforestationPromote use of green energy

Promote safe environment practicesStakeholder responsibility & accountabilitySocially sensitive investment decisionsAdherence to sound and ethical

Participated in National AfforestationinitiativesGiving more support to socials causesespecially medical and educationalinstitutionsAdherence to sound and ethical

governance practicesinstitutions.



Company Strategy



Conclusion

Sustainable Growth Momentum…

The Kenya Power & Lighting Co. Ltd. Units Sold (GWh)

Sustainable Growth Momentum…


4,782

5,633 5,675

5,949 Profit before Tax Operating Income

2,498 2,649 2,738

2,206 2,382

3,522

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

60,728

71,564

80,213

20,560 22,249

23,882

26,848 28,741

Total Assets Shareholders Funds

39,644

48,237

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Planned Power Initiatives

The Kenya Power & Lighting Co. Ltd.Initiative Status of Project

East African Power Master Plan Completed in March 2005

Kenya Tanzania Interconnection Project

Feasibility study completed in Nov. 2002Construction contract negotiated in 2006/07

Tanzania ‐ Zambia InterconnectionProject

Transaction advisor engaged to assist in packaging the project for financing and implementation

Eastern Africa Power Pool (EAPP) Launched in Feb. 2005 and headquartered in Addis Ababa

Nile Basin Initiative (NBI) Feasibility study done Feb 2006 with detailed d & h fdesigns & the four interconnection projectsProject is at procurement stage now

Ethiopia – Kenya Interconnector Feasibility Study completed in March 2009Ethiopia Kenya Interconnector Feasibility Study completed in March 2009AfDB, DBSA & World Bank expected to co‐finance the project

New Generation Plants (5 year period)

The Kenya Power & Lighting Co. Ltd. Project Energy Source Capacity

(MW)Expected Date

2009/10 Tana Redevelopment Hydro 20 Nov 2010

2010/11

Olkaria well head Geothermal 70 June 2011

Kipevu MSD Thermal 120 Dec 2010/

2011/12

Athi River MSD Thermal 80.9 Feb 2012

Athi River MSD Thermal 84 April 2012

Thika MSD Thermal 87 June 2012

Sangoro Power Plant Hydro 21 Dec 2011

Eburru Geothermal 2.2 Dec 2011

Ngong Wind Phase 11 Wind 15 Dec 2011

Aeolus Wind Wind 100 Jan 2012

New Generation Plants (5 year period)

The Kenya Power & Lighting Co. Ltd. Project Energy Source Capacity

(MW)Expected Date

2012/13

Turkana Wind Wind 300 March 2013

Olkaria 1 Extension Geothermal 140 June 2013

Kindaruma Upgrade Hydro 32 June 2013

2013/14 Athi River Mining Coal Coal 19.5 Dec 2013

Olkaria IV Geothermal 140 Dec 2013

Olkaria 111 Geothermal 52 Dec 2013

Mombasa Coal Plant Coal 300 Dec 2013

Ethiopia Import Import 200 Dec 2013

TOTAL MEGAWATTS 1 783 6TOTAL MEGAWATTS 1,783.6

Benefits of the Generations Plants Adequate energy capacity to meet increasing demand Diversified sources of energy Diversified sources of energy Establishment of sufficient reserve capacity to mitigate against any

revenue losses

Committed Transmission Projects


Transmission Line Length Est Cost. (USD$mil.)

Commissioning Date

1 Kamburu Meru 132kv single circuit 124 9 9 20101 Kamburu ‐Meru 132kv single circuit 124 9.9 2010

2 Chemosit ‐ Kisii 132kv single circuit 64 5.1 2010

3 Rabai ‐ Galu 132kv single circuit and Galu Sub station

48 3.6 2010

4 Reactive Compensation Phase 1 ‐ Nrb Transmission system

17 2011

5 Kilimambogo ‐ Thika ‐ Githambo ‐Kiganjo 132kv single circuit

135 10.8 2011

6 Mumias – Rangala 132kv single circuit 35 2.8 2011

7 Sangoro – Sondu 132kv 5 2 2011

8 Mombasa – Nairobi 400KV double circuit 450 135 2012

9 Kenya (Lessos) – Uganda (Tororo) 220kv single circuit

250 24 2012

10 Rabai – Malindi – Garsen – Lamu – Garrissa 220kv single circuit

250 33.9 2012

11 Uprate Embakasi from 180MVA to 270 MVA 2.25 2010

TOTAL 246.35



Company Strategy



Conclusion

Transaction Structure


Redemption and Issue of Shares to GoKpRedemption of 794,962,491 7.85% RPS @ Shs. 207.50 based on VWAP

&

issue of 76,622,891 ordinary shares to GoK

Redemption of 794,962,491 7.85% RPS @ Shs. 207.50 based on VWAP &

issue of 76,622,891 ordinary shares to GoK

Sh S litShare Split

Proposed Share Split 8:1 Proposed Share Split 8:1

Rights IssueFloatation of 488 630 245 new ordinary shares to existing shareholdersFloatation of 488 630 245 new ordinary shares to existing shareholdersFloatation of 488,630,245 new ordinary shares to existing shareholders Entitlement Ratio : 20 new ord. shares for every 51 ord. shares held

Floatation of 488,630,245 new ordinary shares to existing shareholders Entitlement Ratio : 20 new ord. shares for every 51 ord. shares held

Objectives of the Capital Base Restructuring

The Kenya Power & Lighting Co. Ltd. Create an equitable position amongst

shareholders (Ordinary & Preference)shareholders (Ordinary & Preference)

Improve KPLC’s creditworthiness by reducing its p y gleverage.

E bl KPLC i it l f th C it l Enable KPLC raise capital from the CapitalMarkets.

Synchronize KPLC’s Nominal Share Value with theMarket.

Benefits of the Entire Transaction

The Kenya Power & Lighting Co. Ltd. • Strengthen KPLC Balance Sheet to enable the company

raise funds through the issuance of infrastructure bonds.

• Deepen capacity of the energy sector through a stronger

KPLC.

• Broaden the base of ownership in KPLC by GoK not takingoade t e base o o e s p C by Go ot ta g

up its rights.

• Reduce pressure on KPLC to pay Fixed InterestReduce pressure on KPLC to pay Fixed Interest.

• Obtain additional Risk Equity Capital through the

conversionconversion.

Use of Proceeds of the Rights Issue


Projects Cost (Shs

Capacity Enhancement & System Reliability Distribution Projects

( hProjects Cost (ShsMillions)

Likoni Rd S/S 270 City Square 66/11kv S/S 357

Projects Cost (ShsMillions)

Muhoroni‐Ahero‐Kisumu East 33kV link 125

Obote1& 2 Breweries lines 45Eastleigh 66/11kv S/S 292 Kasarani 66/11kv ((St. Lucie Kiriri University) 285 Kikuyu S/Stn Reinforcement 80 Dagoretti Substation 273

Obote1& 2, Breweries lines reconductoring

45

Kisian‐Nyaminina 33kV line 100 Kisii ‐ Oyugis 33kV line 63 New DCK ‐ Suswa 33kV feeder 50

Embu East substation 150 3rd Nairobi West‐Embakasi 66kV line 40 Ruaraka‐Parklands 66kV UG lines 261 Steel Billet‐Jevanjee 66kV link 11

New DCK Suswa 33kV feeder 50

Olkalou‐Wanjohi 33kV interconnector 50

Olkalou‐Gilgil 33kV interconnector 75

Kiganjo 33/11kV relocation 156Steel Billet Jevanjee 66kV link 11 Msambweni ‐ Lunga Lunga 33kV line 120 Jomvu 132/33kV substation 540 Kainuk (Turkwel) 220/33kv Substation 550

h / k /

Kiganjo 33/11kV relocation 156

Thika Industrial substation 230

Kathera 33/11KV S/S 160

Mangu 33/11KV S/S 150 Bahati Dc 33/11kv S/S 150 Bayete ex Lessos fdr 75 Kisumu Musaga 2nd 33kV line 175

Mangu 33/ KV S/S 50

Kiganjo‐Nanyuki 2nd 33kV line 150

TOTAL DISTRIBUTION PROJECTS 4,983

Use of Proceeds of the Rights Issue..Cont..

The Kenya Power & Lighting Co. Ltd. Supply Reliability & Power Quality Projects

Projects Cost (Shs Millions)

Reactive compensation project 800Thika Road National Control Center 2,000

TOTAL TRANSMISSION PROJECTS 2,800

Revenue Enhancement & Protection Project

Projects Cost (Shs Millions)

Prepaid Metering System 2,500



Company Strategy



Conclusion

Conclusion


• Our growth momentum will be sustained going

forward.

• Funds raised through the CBR exercise will be wellFunds raised through the CBR exercise will be well

utilized to boost future earnings.

• We welcome investors to support the CBR exercise.

THANK YOUTHANK YOU


Q&AQ&A

the kenya power & lighting co. ltd investor briefing · pdf filethe kenya power &...

Documents