The planned transfer of Kenya Power’s transmission assets to the Kenya Electricity Transmission Company (Ketraco), will not take place until next year following delays in signing up a transaction advisor and valuation of the targeted assets.
A schedule by the National Treasury had initially indicated that the asset transfer would happen by December 2024, as part of measures to return the utility to profitability.
Kenya Power Managing Director Joseph Siror said that the valuation of the assets would be completed by February 2025, before their subsequent transfer to Ketraco.
“The health status of the balance sheet has changed, but because we initiated a process, we do not want to look like we have abandoned it... there is a transaction advisor who is doing the valuation and we expected this exercise to be completed around January-February,” he told Business Daily.
The electricity distribution monopoly last year, disclosed that it would transfer part of its assets to Ketraco to partially offset Sh83.5 billion worth of on-lent loans to the government, and a further Sh2.5 billion owed to Ketraco.
Kenya Power was reeling from losses and a negative working capital that had seen the International Monetary Fund (IMF) flag the firm, as a growing concern in the face of the huge loans.
The utility had made a net loss of Sh3.19 billion in the year to June 2023 and had a negative working capital of Sh51.23 billion.
But the utility has since overturned the tide and posted a net profit of Sh30.08 billion in the year that ended June, besides cutting the negative working capital to Sh27.4 billion.
Assets targeted for transfer are the 220-kilovolt transmission lines, 11 substations, and land where the infrastructure lies. Initial valuations put them at Sh20 billion but a revaluation of the assets at market prices is likely to place them higher.
“Most of our assets are historically valued and so we needed to get a fresh valuation to inform what to transfer to Ketraco. For example, in our books the value of Electricity House is Sh1,000 and this is why revaluation is inevitable,” Mr Siror added.
The Cabinet in May last year directed Kenya Power to transfer part of its transmission assets to Ketraco in a push to help the electricity distributor clear debts.
Besides the on-lent loans to the National Treasury and debt owed to Ketraco, Kenya Power is yet to be paid billions of shillings under the Last Connectivity project. Ketraco also owes Kenya Power about Sh1.7 billion.
Kenya Power will operate the assets for 10 years after the transfer--a move that is meant to ensure that service delivery is not hampered due to the limited capacity of Ketraco.
