KenGen Ltd. Saw Hydro Power Generation drop by 23.8% but Raised Geothermal Power Generation by 28%.

Published On: February 6, 2024Company: KenGen Limited (KEGN.ke)
What strategies did KenGen use to navigate the economic and environmental challenges faced in the financial year?
KenGen navigated through the economic and environmental challenges by augmenting its geothermal power generation by 28% when hydro power generation dropped due to drought conditions. They also concentrated on strategic objectives and diversification of their portfolio to yield good results despite the obstacles. The company's efforts towards a sustainable future through renewable energy sources aided in creating a positive shift despite the downturn in different sectors of the economy.

Company Overview

  • KenGen Limited successfully navigated domestic and global economic challenges during the financial year, despite significant hurdles such as drought.
  • The company has made progress towards achieving strategic priorities, reflected in satisfactory results.
  • KenGen’s hydro power generation dropped by 23.8%, but managed to uplift by 28% through geothermal power generation.
  • Power demand in the country grew by 5.8%, from 12,566 GWh in 2021/22 to 13,290 GWh.

Economic Overview

  • According to the Economic Survey 2023, the Real GDP expanded by 4.8% in 2022, compared to a revised growth of 7.6% in 2021.
  • Growth was recorded across all sectors, notably in service-oriented activities, despite challenges such as a contraction in the Agriculture, Forestry and Fishing sector.

Future Focus and Strategy

  • Kengen’s focus is on providing reliable and competitively priced electricity to power the nation’s development.
  • The company is keen on commercialization and diversifying its portfolio to include innovative and viable solutions for the future.
  • The company aims to contribute towards achieving 100% renewable energy transition by 2050 in Kenya.
  • 96% of the electricity the company produced came from renewable sources, with future projects aimed at bringing this percentage up to 98%.

Climate Change and Sustainability

  • KenGen is committed to mitigating climate change and continues to promote transparency in its climate-related disclosures.
  • Environmental protection remains a central aspect of the company’s operations.

Board Changes

  • In February 2023, the company witnessed several board changes, which included a change in the Chairman position, the appointment of new Board Members, the retirement of several current members, and the appointment of a new Managing Director & CEO.
  • These changes reflected the strong corporate governance structure in place at KenGen.

Stakeholder Engagement

  • KenGen hosted a multitude of international stakeholders including the British High Commission, Nordic ambassadors to Kenya, Ethiopian Electric Power, Italian investors, Power Africa, etc., which consolidated its position in sustainable development.

Financial Performance

  • Despite the challenging business environment, KenGen showed steady financial performance with a 14% increase in revenue from 2022 and an increase of 48% in after-tax profit.

Planning

  • KenGen is proposing an increase in dividend of 50% over the previous year’s payout.

Useful links

About KenGen Limited (KEGN.ke)

Kenya Electricity Generating Company Limited (KenGen) generates and sells electricity in Kenya and for consumption in East Africa sub-regions. Electricity is generated through hydro, thermal, geothermal and wind power generation plants with a combined installed capacity in excess of 1 600 megawatts. KenGen was incorporated in 1954 under the Companies Act as Kenya Power Company (KPC) to construct the transmission line between Nairobi and Tororo in Uganda, as well as develop geothermal and other power generating facilities in the two countries. KPC sold electricity in bulk at cost to Kenya Power under a management contract. Following energy sectoral reforms in 1996, the management of KPC was separated from Kenya Power and a new enterprise was established called KenGen. The power utility owns 31 power-generating plants and operates in a liberalised power generation environment. Its head office is in Nairobi, Kenya. Kenya Electricity Generating Company Limited is listed on the Nairobi Securities Exchange

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