# Watts Up With KenGen? Powering Kenyan's Energy Future

An episode of [The Mwango Capital Podcast](https://invisiblenetwork.ai/podcast/1583367792), 23 Aug 2025, 46 min.

Audio: https://api.substack.com/feed/podcast/171716708/bc17b45e2816dc11c27d0a38fed305c8.mp3

In this episode recorded on July 21, 2025, and hosted by Ramah Nyang, we are joined by KenGen’s MD and CEO, Eng. Peter Njenga, for a discussion on the company’s background, growth plans, and strategic outlook. We cover future energy prospects, opportunities in renewable energy, diversification of revenue streams, and balancing risks. Subscribe to get notified when we make a new post. Show Notes 00:00:00 Introduction 00:01:42 KenGen’s History and Background 00:04:21 Strategic Plan and Market Performance 00:09:09 Future Energy Projects and Financing 00:15:37 Challenges and Opportunities in Renewable Energy 00:30:24 Diversification and Revenue Streams 00:35:02 Balancing Risk and Dividends 00:36:20 Five-Year Outlook 00:40:30 Common Misconceptions 00:44:05 Final Thoughts and Closing Remarks Get full access to The Mwango Weekly at mwangocapital.substack.com/subscribe

## Transcript

[0:00] SPEAKER_00: Welcome to this edition of Ngo Capital Spaces.
[0:02] SPEAKER_00: It's Monday, the 21st of July.
[0:04] SPEAKER_00: We'll be focusing on Kenya, but by extension, East Africa.
[0:07] SPEAKER_00: You'll see why in the course of the hour.
[0:09] SPEAKER_00: We'll be focusing on the energy sector in this part of the world.
[0:11] And the company we're going to be talking about today,
[0:14] there's many ways I could describe it.
[0:15] I could tell you it's the largest electricity generation
[0:18] company in the country.
[0:19] SPEAKER_00: It's got an installed generation capacity of at least 1,700 megawatts.
[0:23] SPEAKER_00: And unless you're in electricity space, that number may not mean much.
[0:26] SPEAKER_00: But in more direct terms,
[0:28] SPEAKER_00: This is one other way you could think about it.
[0:30] Two out of every three units of electricity that you used today
[0:33] to charge your
[0:33] SPEAKER_00: phone or the headphones you're listening to us on,
[0:36] SPEAKER_00: they came from power plants that this company owns,
[0:39] SPEAKER_00: maintains,
[0:40] SPEAKER_00: and operates.
[0:41] And some of them,
[0:42] I'm willing to bet,
[0:43] are actually older,
[0:44] much,
[0:44] much older than...
[0:46] It's a really large percentage of the people who are listening
[0:48] to this space tonight.
[0:49] SPEAKER_00: Of course,
[0:49] SPEAKER_00: we're talking about Kenjin,
[0:50] SPEAKER_00: or to use its full name,
[0:51] SPEAKER_00: the Kenjin Electricity Generation Company.
[0:53] SPEAKER_00: Back in 2006,
[0:54] SPEAKER_00: you might recall it actually went public in an IPO,
[0:57] SPEAKER_00: which was more than three times oversubscribed at that point in time.
[1:00] Raised the better part of $100 million after the states sold
[1:03] 30% of its share in the company.
[1:05] SPEAKER_00: Now, at just over seven shillings a share, the close of trading today,
[1:09] SPEAKER_00: The company's share price has recovered beyond its pandemic era slump.
[1:13] SPEAKER_00: And in fact,
[1:14] SPEAKER_00: if you're just looking at this year alone,
[1:15] SPEAKER_00: they're up over 90% since the start of the year.
[1:19] And there are not many other companies you can think about that
[1:21] posted performances
[1:22] SPEAKER_00: of that sort,
[1:22] SPEAKER_00: at least not on the NSC.
[1:24] We'll explore what the largest electricity generator here in
[1:28] the country has done,
[1:29] SPEAKER_00: what the state of the business is at the moment,
[1:30] SPEAKER_00: and where it goes from here.
[1:32] We're going to be doing that with the company's managing
[1:34] director,
[1:35] engineer Peter Waveru-Jangan.
[1:37] SPEAKER_00: Welcome to Mango Capsule.
[1:39] SPEAKER_00: Thank you for having me.
[1:41] SPEAKER_00: I guess we should start with what Kenjin is,
[1:44] SPEAKER_00: because I've given a very brief overview of what the company is.
[1:46] SPEAKER_00: And in my case, what I remembered is the roots of Kenjin.
[1:50] SPEAKER_00: For me,
[1:50] go back to 1998 when we had the Electric Power Act and we split
[1:54] what back then was
[1:55] SPEAKER_00: a Kenya Power Lighting Company into its generation function,
[1:58] SPEAKER_00: which is now Kenjin,
[1:59] SPEAKER_00: and then transmission and distribution became other companies,
[2:01] SPEAKER_00: KP,
[2:01] SPEAKER_00: Ketrako,
[2:02] SPEAKER_00: and so on and so forth.
[2:03] But give us a 30-second summary of what Kenjin is and what the
[2:06] history of the
[2:06] SPEAKER_00: company is,
[2:07] SPEAKER_00: because it's much longer than the Electric Power Act of 1998.
[2:10] SPEAKER_01: Thank you very much for having me this evening,
[2:14] SPEAKER_01: and I'm happy to participate in these discussions.
[2:17] SPEAKER_01: Kenjin stands for Kenya Electricity Generating Company,
[2:20] SPEAKER_01: PLC,
[2:21] SPEAKER_01: and we are listed in the Nairobi Security Exchange.
[2:25] SPEAKER_01: We have been around for the last 70 years.
[2:28] We started when we worked together with Kenya Power as Kenya
[2:33] Power Company in 1954.
[2:35] SPEAKER_01: So you can see from 1954, we are now doing 71 years.
[2:40] When we converted to Kenjin,
[2:43] that was in 1997 when the East African Power and Lighting
[2:46] Company
[2:47] Because there was an electric power of 1997,
[2:50] which was unbounding the energy sector.
[2:53] SPEAKER_01: And therefore,
[2:53] KenGen was created so that it can focus on generation and
[2:57] transmission and
[2:58] SPEAKER_01: distribution and retail was left for Kenya Power.
[3:01] And that is when it changed to the name Kenya Electricity
[3:04] Generating Company Limited.
[3:06] We started with a very small capacity way back in 1933 when we
[3:11] had only 6.4
[3:13] SPEAKER_01: megawatts,
[3:14] but that has grown over the years to the current installed
[3:18] capacity of 1,786
[3:19] SPEAKER_01: megawatts.
[3:21] SPEAKER_01: We champion renewable energy,
[3:24] SPEAKER_01: and that is a composition of hydro,
[3:27] SPEAKER_01: geothermal,
[3:28] SPEAKER_01: the wind,
[3:29] SPEAKER_01: and the solar.
[3:30] SPEAKER_01: But we still have a little bit of thermal.
[3:33] SPEAKER_01: So the generation mix currently,
[3:36] SPEAKER_01: out of the 1786 megawatts,
[3:37] SPEAKER_01: 826 megawatts from hydro,
[3:38] SPEAKER_01: 754 megawatts from geothermal.
[3:46] We have a small composition of 25.5 megawatts of wind and the
[3:50] thermal is at 180 megawatts.
[3:54] SPEAKER_01: I mentioned that we also have some solar,
[3:56] but we run or we operate the generation on solar in Garissa on
[4:01] behalf of our sister
[4:02] SPEAKER_01: company,
[4:03] SPEAKER_01: REREC.
[4:04] SPEAKER_01: That is our composition.
[4:06] SPEAKER_01: We have been around for quite some time and therefore
[4:09] SPEAKER_01: We are again looking in the next 10 years, where do you want to go?
[4:13] SPEAKER_01: And we are talking about almost doubling installed capacity.
[4:16] SPEAKER_01: That's what I can say is our brief history of Kenya.
[4:20] SPEAKER_00: I know we'll get into the financials in just a bit,
[4:22] SPEAKER_00: but I want to start by the market reaction,
[4:25] SPEAKER_00: if I can call it that,
[4:25] SPEAKER_00: to Kenjin.
[4:26] SPEAKER_00: And it's been an interesting thing to watch,
[4:28] SPEAKER_00: watching Kenjin's share price jump up by as much as it has this year.
[4:32] What are you hearing from shareholders when they talk to you or
[4:35] they talk to your
[4:35] SPEAKER_00: investor relations team?
[4:37] What is it that has the market excited and they're looking at
[4:39] Kenjin and saying,
[4:40] SPEAKER_00: we think this company is worth something.
[4:42] SPEAKER_00: Let's put a bit more cash in here.
[4:43] SPEAKER_00: Let's buy the stock.
[4:44] I think what is important is we have a very robust strategic
[4:50] plan which we launched
[4:52] SPEAKER_01: last year in October.
[4:54] SPEAKER_01: And it is looking at the next 10 years horizon and it has four pillars.
[5:00] One of the main pillar is increasing our installed capacity by
[5:03] 1,500 megawatts.
[5:06] And we have an array of projects that we are working on in the
[5:11] area of Chiosamu,
[5:12] SPEAKER_01: in the area of hydro,
[5:14] SPEAKER_01: in the area of wind,
[5:15] SPEAKER_01: and in the area of solar.
[5:16] SPEAKER_01: So that gives the investors hope that Kenjen is going to grow.
[5:23] SPEAKER_01: And besides that,
[5:23] we are also looking at the option of getting into other revenue
[5:28] generating streams.
[5:29] We are looking at diversifying because we have very good skills
[5:33] and competencies in
[5:35] SPEAKER_01: geothermal generation.
[5:36] SPEAKER_01: In fact,
[5:37] Kenjin is number one in Africa and number seven in the world in
[5:41] the geothermal
[5:42] SPEAKER_01: generation.
[5:44] SPEAKER_01: So that one alone tells you how good we are.
[5:46] SPEAKER_01: And therefore, we want to utilize the skills and competencies.
[5:50] In the area of consultancies,
[5:51] we want to offer consultancy services in the region.
[5:54] In fact,
[5:55] we have already been in Aswatini,
[5:58] where we did exploration consultancy.
[6:01] SPEAKER_01: And we are now looking at doing exploration drilling in Tanzania,
[6:06] where we have already sent our staff and will be working there
[6:09] for the next few
[6:10] months to be able to help them to explore and confirm whether
[6:13] they have geothermal
[6:14] SPEAKER_01: potential.
[6:15] SPEAKER_01: We have other countries in the region that are also looking up to us.
[6:19] SPEAKER_01: We have Zambia,
[6:20] SPEAKER_01: we have Malawi,
[6:22] SPEAKER_01: and they have also inquired from us whether we can work with them.
[6:25] Besides that,
[6:26] even other countries outside this continent,
[6:29] Butan has also approached us.
[6:31] SPEAKER_01: And they are also asking us whether we can work with them.
[6:34] SPEAKER_01: So that will generate alternative revenues for us.
[6:37] SPEAKER_01: And that gives us hope.
[6:39] SPEAKER_01: In our strategy,
[6:40] we are looking at increasing our alternative revenues so that
[6:44] the composition will
[6:45] SPEAKER_01: be 20% in the next 10 years.
[6:48] Could you go into a bit more detail on the size of the
[6:50] contracts that we're looking at?
[6:51] Because this actually did come up just ahead of this space from
[6:54] one of the
[6:54] SPEAKER_00: followers of the Mongol Capital Accountant.
[6:56] SPEAKER_00: And he was asking for an update on the drilling contracts in Tanzania.
[6:59] And just for context for our audience today,
[7:01] Kenjin has been fairly active in the region,
[7:03] right?
[7:03] SPEAKER_00: There's a six and a half million dollar
[7:05] SPEAKER_00: Drilling contract for three wells.
[7:06] SPEAKER_00: I was back in Djibouti in 2021.
[7:08] SPEAKER_00: Drilling started, I believe, in November that year.
[7:10] SPEAKER_00: There was a $58 million contract.
[7:13] SPEAKER_00: That's about 7.6 billion shillings.
[7:15] Contract to drill wells for the Ethiopian Electric Power
[7:17] Company as well in 2022.
[7:20] SPEAKER_00: So let's start with that question on Tanzania,
[7:22] SPEAKER_00: because the Rift Valley,
[7:24] SPEAKER_00: of course,
[7:24] SPEAKER_00: is a high potential area for geothermal power.
[7:27] SPEAKER_00: But I guess from a shareholder perspective,
[7:29] SPEAKER_00: the question is,
[7:30] SPEAKER_00: okay,
[7:30] SPEAKER_00: what sort of revenues are we looking at here?
[7:33] SPEAKER_01: We have just signed the contract recently.
[7:36] SPEAKER_01: I don't have the exact figures,
[7:37] but we have reasonable amounts that we are focusing on because
[7:41] this is just
[7:41] SPEAKER_01: exploration,
[7:42] SPEAKER_01: drilling exploration wells.
[7:44] SPEAKER_01: It's not what we would expect when you're doing the production wells.
[7:48] If you're talking of a million dollars,
[7:50] that will be good for us to start with.
[7:52] SPEAKER_01: But going forward,
[7:53] SPEAKER_01: we believe that we can also get into doing the production wells,
[7:57] which will be more profitable going forward and it will give us
[8:00] more revenues.
[8:02] We don't get into the weeds or the details around what an
[8:04] exploration,
[8:04] what's a production.
[8:05] SPEAKER_00: Can you give us the amateur explanation,
[8:07] SPEAKER_00: if I can call it that,
[8:08] SPEAKER_00: on what the difference between those two is?
[8:11] SPEAKER_01: Yes, because of what the cost that is involved in drilling.
[8:15] SPEAKER_01: For the exploration wells,
[8:17] SPEAKER_01: we normally drill shallow,
[8:19] SPEAKER_01: I would call it a narrow diameter,
[8:21] SPEAKER_01: to just test that we have this potential for geothermal.
[8:26] SPEAKER_01: But when you now do the production,
[8:28] you have to do a well that actually goes to the levels where
[8:32] you have the adequate
[8:34] pressures and temperatures for the steam that is capable of
[8:38] driving the turbines
[8:39] SPEAKER_01: and then generate power.
[8:41] SPEAKER_01: The exploration is just to do a test,
[8:43] do actual confirmation that really when you go down into this
[8:47] earth crust,
[8:48] then you have heat that is able to generate steam or production
[8:52] of electricity.
[8:54] SPEAKER_00: Yes, that is what we look at.
[8:56] SPEAKER_00: And for me,
[8:56] SPEAKER_00: just looking at utilities and energy companies,
[8:58] it's always fascinating to me to see the similarities between
[9:01] what you guys do in
[9:02] SPEAKER_00: geothermal drilling and what the oil guys do,
[9:04] SPEAKER_00: because in some ways the tech is interesting and similar.
[9:06] SPEAKER_00: You're drilling to roughly comparable depths.
[9:09] SPEAKER_00: One of the things that you have in your project pipeline,
[9:11] SPEAKER_00: and this is going back to the strategic plan you mentioned earlier,
[9:15] SPEAKER_00: If you're going to add 1500 megawatts of renewable generation capacity,
[9:19] that's almost like doubling your current generation capacity
[9:21] over the next 10
[9:22] SPEAKER_00: years.
[9:23] SPEAKER_00: Walk us through the headline numbers for that.
[9:25] SPEAKER_00: How long are we looking at in bringing that capacity online?
[9:28] SPEAKER_00: What sort of energy sources are we looking at?
[9:30] SPEAKER_00: Is it mostly geothermal, mostly hydro?
[9:33] SPEAKER_00: More importantly, how is it going to be paid for?
[9:34] SPEAKER_00: Where is the capital for that going to come from?
[9:36] I mentioned earlier that we have a strategy plan that is
[9:39] running for a period of 10
[9:40] SPEAKER_01: years starting last year.
[9:42] And therefore,
[9:43] we have projections on what we shall be getting at what time of
[9:47] that period.
[9:49] SPEAKER_01: And we are looking at out of the 800 and the 1500 megawatts,
[9:51] SPEAKER_01: we are looking at 840 of that will be geosamu.
[9:52] SPEAKER_01: About 140 will be hydro.
[10:01] SPEAKER_01: 300 will be wind and another maybe 300 megawatts will be solar.
[10:07] SPEAKER_01: So all that we have identified various projects across the country.
[10:12] We know,
[10:12] of course,
[10:13] the area of geothermal,
[10:14] we have concentrated in Naivasha,
[10:16] in Olkaria area.
[10:18] That area we have almost exhausted and we are now looking at
[10:22] beyond Olkaria.
[10:24] SPEAKER_01: There are quite a number of areas, as you mentioned,
[10:27] SPEAKER_01: where there is potential.
[10:28] We have Meningai,
[10:30] we have Paka in Baringo,
[10:32] we have Silali in Baringo as well.
[10:35] SPEAKER_01: So quite a number of that area.
[10:37] SPEAKER_01: And we are looking at work collaborating with our sister organization,
[10:40] SPEAKER_01: Geothermal Development Company,
[10:42] so that we can be able to access these geothermal fields and
[10:46] drill or work together
[10:48] SPEAKER_01: with them and get more of this geothermal to get to this 840.
[10:52] SPEAKER_01: We already have projects that we are working on.
[10:56] SPEAKER_01: Currently,
[10:57] SPEAKER_01: we rebuild one of our very oldest power plants called Carrier 1,
[11:02] SPEAKER_01: where we put it down.
[11:03] We are going to put up a new power plant,
[11:06] which is going to generate the 3 megawatts.
[11:08] SPEAKER_01: That is already being done.
[11:10] We are seeking financing a project where we are in discussions
[11:14] with the financiers
[11:15] SPEAKER_01: who 8 megawatts within all Carrier.
[11:18] where we have wells that are already done and we can be able to
[11:21] build that power plant.
[11:22] With these other additional areas,
[11:24] we'll be able to get to 840 in the next 10 years.
[11:28] When it comes to hydro,
[11:30] of course,
[11:30] we are looking at other areas in Kenya.
[11:34] For example,
[11:34] in Western,
[11:35] when you go to Ebuye,
[11:36] we have a potential of about 40 MW.
[11:39] SPEAKER_01: We are already doing a feasibility study on the viability of that.
[11:43] SPEAKER_01: We generate 40 MW.
[11:45] SPEAKER_01: We have a number of other small rivers around the country which also have
[11:49] SPEAKER_01: potential,
[11:50] and we have launched our feasibility on the small hydros so
[11:53] that we can also be
[11:55] able to harness additional hydros in other areas besides where
[11:58] we have our main
[11:59] SPEAKER_01: hydropower plants in eastern.
[12:01] SPEAKER_01: When we talk about wind,
[12:03] SPEAKER_01: there is a lot of very good potential in Marsabit,
[12:06] where studies that were done a while ago showed that we have a
[12:10] potential of up to
[12:11] SPEAKER_01: 1,000 megawatts of wind generation in Marsabit.
[12:15] SPEAKER_01: Currently,
[12:16] SPEAKER_01: we're working on a phase one,
[12:18] SPEAKER_01: which will be 100 MW,
[12:20] SPEAKER_01: and this is going to increase in the next two years to 200 MW.
[12:25] We'll build it up to where we believe that we can be able to
[12:28] harness maximum of
[12:30] SPEAKER_01: that wind potential.
[12:31] SPEAKER_01: We have another site in Meru, which we are also looking at.
[12:34] We are in discussions with the Meru County government to
[12:37] resolve the issues of the
[12:38] SPEAKER_01: land so that we can also progress the project on the wind.
[12:42] SPEAKER_01: When it comes to solar,
[12:44] we have already financing on a project that we are going to
[12:48] carry out in Kamburu,
[12:49] SPEAKER_01: the eastern region.
[12:51] SPEAKER_01: which is 42.5 megawatts.
[12:52] And we are also doing a study on a footing solar that we see
[12:58] how much we can be
[12:58] SPEAKER_01: able to get when you put the solar panels on our dams.
[13:02] SPEAKER_01: And that will be very useful for us.
[13:04] SPEAKER_01: So that is what we are talking about.
[13:06] And there is a very beautiful outlay on our journey on how we
[13:11] shall work and be
[13:12] SPEAKER_01: able to build up that 1,500 megawatts in the next 10 years.
[13:16] SPEAKER_00: In order to get all of that capacity online,
[13:18] SPEAKER_00: how much capital do you need and where do you raise it from?
[13:22] SPEAKER_01: When we did the assessment,
[13:23] considering the historical information and what we have been
[13:26] able to do before,
[13:27] we are talking about 4.3 billion US dollars that will be
[13:32] required for that.
[13:33] Is there any plan to raise at least big chunks of that from the
[13:36] domestic market,
[13:37] SPEAKER_00: maybe through either partial share sale from the principal shareholder,
[13:41] SPEAKER_00: because governments still own 70%,
[13:42] SPEAKER_00: right,
[13:43] SPEAKER_00: of KenGen,
[13:43] they could raise some of that cash by reducing their stake
[13:45] maybe to around 60,
[13:47] SPEAKER_00: 52,
[13:47] SPEAKER_00: or perhaps even issuing a green bond,
[13:50] because all of this cash is essentially going into developing
[13:53] renewable energy
[13:54] SPEAKER_00: assets.
[13:54] SPEAKER_00: 55%,
[13:54] And there's been a lot of talk about trying to crowd in green
[13:57] capital that will
[13:58] SPEAKER_00: enable the development of assets like the ones you're talking about.
[14:01] SPEAKER_00: Are there any plans of that sort?
[14:03] SPEAKER_00: Oh, definitely.
[14:04] SPEAKER_01: We are looking at various options for financing.
[14:07] SPEAKER_01: You have talked about the green bond,
[14:08] SPEAKER_01: which is now a big discussion and that will be a very good option.
[14:13] SPEAKER_01: What is important for us is first of all,
[14:15] to complete the feasibility study so that we can be able to
[14:19] showcase that these
[14:20] SPEAKER_01: projects are actually viable.
[14:22] And then when we go to the financiers and these options,
[14:25] then it will become easy for us.
[14:27] The option of going to releasing some of the shares from the
[14:30] government is now another option.
[14:32] SPEAKER_01: And I believe because of our history and our success,
[14:36] I know there are quite a number of financiers who have kept on
[14:40] approaching us.
[14:41] SPEAKER_01: Tell us which projects you want to do.
[14:43] SPEAKER_01: We want to initiate a discussion on how the financing can be done.
[14:46] SPEAKER_01: Of course,
[14:47] SPEAKER_01: most of them,
[14:48] SPEAKER_01: through the concessional loaning,
[14:50] SPEAKER_01: with the help of the government,
[14:51] SPEAKER_01: they will be able to give us 70% to 75% debt.
[14:54] But 25%,
[14:54] of course,
[14:55] we have to raise ourselves through our own retained earnings.
[14:58] So all these options that are on the table and discussions are
[15:02] going on actively.
[15:03] SPEAKER_01: On the projects that we have completed,
[15:05] SPEAKER_01: the feasibility study,
[15:06] SPEAKER_01: we have already started engaging the various financials.
[15:10] SPEAKER_00: And I'm guessing if you're engaging with private financiers here,
[15:13] SPEAKER_00: this would have to go through the PPP directorate in Treasury,
[15:15] SPEAKER_00: or do you handle that yourselves?
[15:17] When you talk of the PPP,
[15:19] that is when we have to do the public-private partnerships.
[15:23] SPEAKER_01: But when we have to do the projects ourselves,
[15:25] SPEAKER_01: then we go through the government if we need concessional loans.
[15:29] SPEAKER_01: But if we can be able to utilize our balance sheet again,
[15:32] we can also go to the financiers directly and we'll be able to
[15:36] get the financing.
[15:37] SPEAKER_00: Part of that capacity that we're talking about,
[15:39] SPEAKER_00: it includes grid-tied battery storage,
[15:43] SPEAKER_00: as I understand it,
[15:44] SPEAKER_00: roughly to the team of at least 100 megawatts of capacity.
[15:47] SPEAKER_00: And there's been an interesting question that's come up on that at DeMau.
[15:51] SPEAKER_00: It's asking,
[15:52] what's the rationale for that project when there are
[15:54] alternatives like pumped hydro
[15:56] SPEAKER_00: or compressed air storage?
[15:58] SPEAKER_01: I think this technology for storage,
[16:00] the one that is very well developed and the one that is easier
[16:04] to implement is the
[16:06] SPEAKER_01: battery storage.
[16:07] SPEAKER_01: And that is where we have come together with the World Bank.
[16:10] SPEAKER_01: In fact,
[16:11] we are the implementing agent of that project funded by World
[16:14] Bank of 100 MWh of
[16:16] SPEAKER_01: battery storage.
[16:17] SPEAKER_01: But we are also looking at the option of pumped storage,
[16:20] SPEAKER_01: which is an important area that we need to look at.
[16:22] SPEAKER_01: And again, we are in discussions.
[16:24] SPEAKER_01: We need to do feasibility study.
[16:26] SPEAKER_01: Again,
[16:27] we have to look for financing either grant or financing from
[16:31] ourselves to do the
[16:32] SPEAKER_01: feasibility study to be able to do the pumped storage project.
[16:35] SPEAKER_01: There are other forms of storage.
[16:37] SPEAKER_01: is molten salt, which has been tried elsewhere in other nations.
[16:42] And those are options that we are looking at to see which is
[16:45] the most efficient one
[16:46] SPEAKER_01: for us at the moment.
[16:47] And the reason why we need storage is because we have a lot of
[16:51] what we call the
[16:52] SPEAKER_01: variable renewable energies,
[16:53] SPEAKER_01: that is the wind and the solar.
[16:55] SPEAKER_01: And currently considering the portion,
[16:58] SPEAKER_01: which is quite substantial in the grid,
[17:00] SPEAKER_01: then it has destabilized the grid.
[17:03] And that then requires us to move very fast and bring in the
[17:07] storage projects to
[17:08] SPEAKER_01: stabilize the grid.
[17:09] There's an interesting question that we're getting here from,
[17:11] I believe it's Willy Sawiti.
[17:13] SPEAKER_00: And one of the things he's asking is,
[17:15] why is Kenjin putting up many small power plants instead of
[17:19] putting up one large
[17:20] SPEAKER_00: power plant in order to benefit from economies of scale?
[17:24] SPEAKER_00: And some of the things that he's talking about,
[17:26] I've just actually put a list of some of the things that are in
[17:28] your project
[17:29] SPEAKER_00: pipeline.
[17:30] SPEAKER_00: It's linked essentially to the treasure space beneath it.
[17:32] And it's seven-fork solar PV,
[17:34] that's 42 megawatts,
[17:35] all carry a 7 geothermal,
[17:38] 80.3 megawatts.
[17:39] SPEAKER_00: Karura hydropower, 90 megawatts.
[17:41] SPEAKER_00: I guess his argument is, I'm seeing a lot of small numbers.
[17:43] Is this an argument of they're just a geography argument that
[17:46] there simply isn't enough space?
[17:48] Or all the stuff that we could potentially do large projects on
[17:51] has already been taken up?
[17:53] SPEAKER_01: We have to look at what is the demand in the country.
[17:57] SPEAKER_01: Our energy demand grows at around 6% per year.
[18:01] SPEAKER_01: And that alone we require to have not very huge power plants at once.
[18:06] And then of course there is the issue of funding that becomes a
[18:09] challenge when you
[18:10] SPEAKER_01: have a very big project.
[18:11] SPEAKER_01: It requires a lot of financing.
[18:13] SPEAKER_01: The other challenge is,
[18:14] SPEAKER_01: of course,
[18:15] SPEAKER_01: if you have one very big project in one location,
[18:18] SPEAKER_01: then you have to also look at the evacuation network.
[18:21] SPEAKER_01: Is it available?
[18:23] SPEAKER_01: And all that now tells you why we have to look at the available sources.
[18:29] SPEAKER_01: If it is where we,
[18:30] SPEAKER_01: for example,
[18:30] the feasibility study that was done only indicated that we can
[18:34] get about 40 mega.
[18:35] SPEAKER_01: So we go for that.
[18:37] SPEAKER_01: You go to the other area, you're talking about Mars a bit.
[18:40] SPEAKER_01: The potential is 1,000 megawatts,
[18:42] SPEAKER_01: but how much can you start with considering the demand growth so that we
[18:47] SPEAKER_01: synchronize the demand and the supply?
[18:50] SPEAKER_01: If demand grows faster,
[18:52] then we have to think about big projects depending on whether
[18:56] those resources are
[18:57] SPEAKER_00: available.
[18:58] SPEAKER_00: And speaking of large power plants,
[18:59] I'm actually seeing some of our colleagues here from the
[19:01] nuclear power unit of
[19:03] SPEAKER_00: government who are listening to the space we see you.
[19:05] SPEAKER_00: Thank you for your time this evening.
[19:06] SPEAKER_00: Another question from our audience here,
[19:08] SPEAKER_00: and this is in relation to,
[19:09] SPEAKER_00: I know transmission is not essentially in your wheelhouse,
[19:12] SPEAKER_00: but the challenge here that at least one of our listeners is saying is,
[19:15] SPEAKER_00: hang on a minute,
[19:16] if Tanzania and Kenya are finalizing a deal that will see
[19:19] Tanzania importing power
[19:21] SPEAKER_00: significantly,
[19:21] SPEAKER_00: through the Kenyan grid.
[19:23] SPEAKER_00: His question is,
[19:23] how come our neighbors can generate power cheaper than us and
[19:27] then trade it through
[19:29] SPEAKER_00: our grid,
[19:30] SPEAKER_00: presumably at a much lower cost?
[19:32] SPEAKER_01: To answer that question is, again, what I've just mentioned earlier.
[19:36] SPEAKER_01: If you look at our neighbors,
[19:37] SPEAKER_01: for example,
[19:38] Uganda has the Nile River where they are able to build a very
[19:43] high capacity
[19:44] SPEAKER_01: hydropower plant.
[19:45] I think the Julius Nyerere power plant,
[19:47] again,
[19:48] is because that resource is available for them.
[19:52] SPEAKER_01: And they have been able to move ahead and develop those resources.
[19:56] Again,
[19:56] the members need to know that we are now looking at the region
[20:00] interconnectivity.
[20:01] SPEAKER_01: We have the East African power pool,
[20:02] where we have 13 of the countries in the region that are
[20:05] working in that pool.
[20:07] SPEAKER_01: And there is always a lot of advantage in having to work together.
[20:12] SPEAKER_01: Because if in Tanzania,
[20:14] SPEAKER_01: for example,
[20:14] SPEAKER_01: we have gas,
[20:16] then Tanzania can utilize their resource in gas and generate
[20:19] electricity using gas.
[20:21] SPEAKER_01: Kenya has geothermal, very huge potential.
[20:24] SPEAKER_01: We have 10,000 megawatts that are available through geothermal.
[20:29] And therefore,
[20:30] Kenya can also focus perhaps on generating power through
[20:33] geothermal.
[20:34] SPEAKER_01: You go to Uganda again,
[20:36] SPEAKER_01: they have the advantage of the Nile River,
[20:38] SPEAKER_01: which they can also generate power through hydro.
[20:41] SPEAKER_01: We have wind in the whole region,
[20:43] SPEAKER_01: but because wind is an intermittent source,
[20:46] SPEAKER_01: then you need to have various projects across the region.
[20:50] SPEAKER_01: And finally,
[20:50] SPEAKER_01: when we have developed these resources,
[20:53] SPEAKER_01: then the countries that don't have these resources,
[20:56] SPEAKER_01: then we can be able to export to those countries using this regional
[21:00] SPEAKER_01: interconnectivity.
[21:02] So the question about why are we not looking at what other
[21:05] countries are looking
[21:06] SPEAKER_01: at,
[21:07] which potential is perhaps because our resource when it comes
[21:10] to hydro is not that
[21:11] SPEAKER_01: much.
[21:12] But when you go to Geotherm,
[21:14] again,
[21:15] we can be able to build power plants in the various sources.
[21:18] SPEAKER_01: I mentioned earlier in Paka in Baringo,
[21:21] SPEAKER_01: when you go to Menengai,
[21:22] SPEAKER_01: and you go to Silali in Baringo and other areas.
[21:26] SPEAKER_01: When you go to Suswa, for example, these are different locations.
[21:30] SPEAKER_01: Where again,
[21:31] SPEAKER_01: you can harness a substantial amount and put together,
[21:34] SPEAKER_01: then we'll be able to contribute to the regional requirements.
[21:38] SPEAKER_00: And of course,
[21:38] SPEAKER_00: geography is one thing,
[21:39] but it also comes back down to what one of the former managing
[21:41] directors of Kenjin,
[21:42] SPEAKER_00: Edin Joroga,
[21:43] SPEAKER_00: used to say,
[21:44] SPEAKER_00: if you want us to put up a lot of power,
[21:45] SPEAKER_00: that's fine.
[21:45] SPEAKER_00: Who's going to foot the bill for this sort of thing?
[21:48] SPEAKER_00: I want to ask you about the thermal power plants,
[21:50] SPEAKER_00: because last year,
[21:51] SPEAKER_00: I believe there was a decommissioning of two thermal power plants,
[21:54] SPEAKER_00: one in Mohoroni and another one in Kipebu.
[21:56] SPEAKER_00: So that took about 133 megawatts of capacity off the grid.
[22:00] Are there any further plant decommissionings in mind,
[22:03] or is it going to stop here?
[22:04] SPEAKER_00: Because...
[22:05] There's an argument to maintain a responsive spinning reserve
[22:09] on the grid at the
[22:10] SPEAKER_00: moment,
[22:10] SPEAKER_00: isn't there?
[22:11] Yes,
[22:11] and our country has already pronounced that we want to go 100%
[22:14] green by the year 2030.
[22:17] So that's the reason the decommissioning of some of these
[22:21] tunnel plans is ongoing.
[22:23] So when you come to the end of life of a project like what
[22:26] happened for Kipev1,
[22:28] SPEAKER_01: that one is lined up for decommissioning.
[22:30] SPEAKER_01: Similarly for Ngoroni, the same thing happens.
[22:34] If we also have Kipevu 3,
[22:36] that the power purchase agreement is going to end in 2031.
[22:40] SPEAKER_01: Again, we are looking at that period to ensure that one also.
[22:43] SPEAKER_01: We decommission it at that point.
[22:45] So the idea is basically to ensure that our power composition
[22:49] is getting to 100% green.
[22:51] SPEAKER_01: At the moment, we are doing above 90, slightly above 90%.
[22:56] SPEAKER_01: And that is almost less in the world.
[22:58] SPEAKER_01: But our ambition in this country is to get to 100% green.
[23:02] SPEAKER_01: But of course,
[23:02] SPEAKER_01: what you have said at the moment,
[23:04] there are areas where we require that thermal because of the
[23:09] evacuation network
[23:10] SPEAKER_01: challenges.
[23:11] But as we continue to build up the evacuation network and
[23:14] ensure that power that is
[23:16] SPEAKER_01: generated from Korea,
[23:17] SPEAKER_01: for example,
[23:18] can get to Western and it can also get to the coast and any
[23:22] other part where it is
[23:23] SPEAKER_01: required,
[23:24] then that will mean that we may not require the thermal power
[23:28] plant in those
[23:28] SPEAKER_01: locations.
[23:30] SPEAKER_00: There's a couple of interesting questions coming up around hydro.
[23:33] And I know one of the plans that you have in the pipeline is to
[23:35] raise the wall on
[23:36] SPEAKER_00: Massinga Dam by at least one and a half meters,
[23:39] SPEAKER_00: which will have cascading benefits down the line.
[23:41] SPEAKER_00: But Dennis Karama is asking us here,
[23:43] how are you managing the climate risk for your hydroelectric
[23:47] power plants?
[23:47] SPEAKER_00: Because,
[23:47] SPEAKER_00: for example,
[23:48] SPEAKER_00: I remember in 2022,
[23:49] SPEAKER_00: actually,
[23:50] we had this big drop in power production from the hydroelectric
[23:53] plants because
[23:53] SPEAKER_00: there simply wasn't enough water coming into the dams.
[23:57] SPEAKER_00: And we're seeing those big climatic events,
[23:59] SPEAKER_00: those droughts,
[24:00] SPEAKER_00: they're becoming a lot more intense.
[24:01] SPEAKER_00: They're also becoming a lot more frequent.
[24:03] So given the fact that you have such a large amount of
[24:06] hydroelectric generation
[24:08] SPEAKER_00: capacity on the grid at the moment,
[24:10] SPEAKER_00: which is about 826 megawatts,
[24:12] SPEAKER_00: how are you managing that climate risk?
[24:15] SPEAKER_00: If you have more frequent droughts,
[24:16] SPEAKER_00: more intense droughts,
[24:17] SPEAKER_00: will these power plants remain viable for the next 20,
[24:19] SPEAKER_00: 30 years?
[24:22] That is the reason why in our new strategic plan,
[24:25] we are deliberately focusing on geothermal.
[24:28] You remember I talked about out of the 1500 megawatts,
[24:33] 840 will be geothermal.
[24:35] SPEAKER_01: Only 140 will be from hydro.
[24:37] And that speaks into that area of the climate challenges that
[24:41] we have had before.
[24:42] SPEAKER_01: But the reason why we believe that if we raise the dam by 1.5 meters,
[24:46] it means we'll be able to store more water and be able to
[24:49] manage it and use it for
[24:51] SPEAKER_01: a longer period,
[24:52] SPEAKER_01: even when we have dry spells.
[24:54] SPEAKER_01: And that is the main reason we are working on that project.
[24:57] But looking at the way our government has come out very
[25:00] strongly to improve
[25:02] SPEAKER_01: the forest cover of this country.
[25:04] SPEAKER_01: I remember our president has talked about planting 15 billion trees,
[25:08] SPEAKER_01: which we,
[25:09] SPEAKER_01: as the Ministry of Energy,
[25:10] SPEAKER_01: where we are part of,
[25:11] we are working together with the Ministry of Energy to ensure
[25:14] that we make our
[25:15] SPEAKER_01: contribution to ensure that we plant trees.
[25:17] SPEAKER_01: And that,
[25:18] SPEAKER_01: we believe,
[25:19] is going to change the climate effects due to what has happened
[25:22] to deforestation.
[25:24] SPEAKER_01: I believe hydro is very key.
[25:26] It is one of the sources where we are able to stabilize power
[25:31] to also be able to
[25:33] provide what we call a spinning power capacity so that in case
[25:37] some power plants
[25:38] SPEAKER_01: like the wind,
[25:39] SPEAKER_01: if it goes down,
[25:40] then we have hydro power plants that are able to pick up very
[25:44] quickly and be able
[25:45] SPEAKER_01: to plug in what we have lost from the wind or from the solar.
[25:50] There's a couple more interesting questions coming up on the
[25:52] DMs and even just on
[25:54] SPEAKER_00: the Church of Timeline itself,
[25:55] SPEAKER_00: although this one's left field,
[25:57] SPEAKER_00: I guess,
[25:57] because one of the things that always tends to come up when
[26:00] you're talking about
[26:00] SPEAKER_00: energy demand is if you have large consumers of energy,
[26:04] SPEAKER_00: can we just collocate them right close to where these power plants are?
[26:08] SPEAKER_00: Setting up an industrial parking or carrier, for example.
[26:11] SPEAKER_00: One of those questions is related to this, well, tangentially anyway.
[26:14] energy enthusiast and entrepreneur,
[26:15] that's a handle I can see at the moment.
[26:17] He says that Ethiopia has made around $200 million in Bitcoin
[26:20] mining in the last
[26:21] SPEAKER_00: couple of months at a rate around 3.14 US cents per kilo an hour.
[26:25] SPEAKER_00: How competitive, he asks, can Kenjin be in Bitcoin mining?
[26:30] SPEAKER_00: Is that something that you're willing to explore with companies who say,
[26:32] SPEAKER_00: we'll bring the computing power,
[26:34] SPEAKER_00: what we need is a long-term contract for cheap,
[26:37] SPEAKER_00: clean electricity from Kenjin?
[26:39] SPEAKER_00: Yes, yes.
[26:40] SPEAKER_00: In fact,
[26:41] we are already moving in that direction because we have
[26:44] established what we are
[26:45] SPEAKER_01: calling Green Energy Park in Naivation.
[26:48] SPEAKER_01: That is among our geothermal power plants.
[26:50] We have identified a very huge area which we have recently
[26:54] received the licensing
[26:55] SPEAKER_01: to operate as a special economic zone.
[26:58] We floated expression of interest tender available and we got a
[27:02] lot of interest.
[27:03] And one of the anchor clients is actually somebody who wants to
[27:07] put up a data center.
[27:08] And the issue of Bitcoin mining can also come in and be able to
[27:12] set up their station there.
[27:14] SPEAKER_01: So that way, we shall be able to provide 100% green energy.
[27:20] SPEAKER_01: And of course,
[27:20] that will be very competitive because everybody in the world is
[27:24] looking at products
[27:26] SPEAKER_01: that are produced through 100% green energy,
[27:30] SPEAKER_01: which means you are doing something to sustain the planet going forward.
[27:35] SPEAKER_01: So that is already in place.
[27:37] SPEAKER_01: We are already working on it.
[27:38] SPEAKER_01: We are doing the preliminary arrangements to put in the infrastructure,
[27:43] SPEAKER_01: the road,
[27:44] SPEAKER_01: providing power to that green energy park.
[27:47] SPEAKER_01: We are looking at how do we provide the water?
[27:49] SPEAKER_01: How do we connect internet to the same place?
[27:52] SPEAKER_01: So that when somebody comes and sets up their factory or whatever...
[27:58] SPEAKER_01: institution they set up there, then it is accessible.
[28:01] And you remember,
[28:02] our career is very close to Suswa,
[28:05] where we have our SGR coming to.
[28:07] And that means it will be very easy for anybody who wants to
[28:12] export their products,
[28:13] SPEAKER_01: be able to transport that through the SGR to the port in Mombasa.
[28:17] SPEAKER_00: So we are already in that.
[28:18] Will they be able to negotiate a PPA directly with you without
[28:22] having to go through Kenya Power?
[28:24] And if so,
[28:25] what sort of tariff are we looking at for those sort of
[28:27] industrial consumers?
[28:29] SPEAKER_01: Through the New Energy Act,
[28:31] Kenjen has now the opportunity of supplying power directly from
[28:35] our power plants to
[28:36] SPEAKER_01: the consumers.
[28:37] SPEAKER_01: But of course,
[28:38] there is a requirement that these clients must be totally new
[28:42] clients so that we
[28:43] SPEAKER_01: don't fish customers from Kenya Power and re-franchise KPLC.
[28:48] So anybody who is coming as a totally new client in this
[28:52] country can come to us and
[28:54] SPEAKER_01: will be able to supply power directly to them.
[28:57] SPEAKER_01: Of course,
[28:57] the tariff will be reasonable because we are not transporting
[29:01] this power to five
[29:02] SPEAKER_01: areas.
[29:03] SPEAKER_01: And the losses are lower.
[29:04] So we will negotiate on a better and reasonable price for them
[29:09] to be able to benefit.
[29:11] SPEAKER_01: Are you able to put any numbers on that?
[29:13] SPEAKER_01: Not at the moment,
[29:13] SPEAKER_01: because this will be negotiated prices,
[29:16] SPEAKER_01: but it will definitely be better than what they will get in the market.
[29:21] SPEAKER_00: Speaking of capital deployment,
[29:23] SPEAKER_00: because I know the 2024 annual report,
[29:25] there's a fair bit of cash that's coming in from largely
[29:28] concessional sources.
[29:29] KFW,
[29:29] that's the Germans,
[29:30] the World Bank,
[29:31] there's a bit of euro debt and dollar debt in there.
[29:34] SPEAKER_00: IFD, the Agence Ponce de Dévelopment, the French Agency for Development.
[29:37] Collectively,
[29:38] that's roughly $26 billion or thereabouts of concessional debt.
[29:42] SPEAKER_00: Is there any hedging in place for these foreign currency facilities?
[29:46] SPEAKER_00: So we avoid a situation where we have the currency crash,
[29:49] SPEAKER_00: for example,
[29:50] SPEAKER_00: that happened around 2023 or 2024.
[29:53] SPEAKER_00: Currency tax, your liabilities essentially just go through the roof.
[29:57] SPEAKER_01: Yes, that's a good question.
[29:59] SPEAKER_01: And we are looking at how the situation is when the folex exchanges,
[30:03] they have affected most organizations in the past and therefore
[30:06] hedging is an
[30:07] option that we need to look at and be able to see how we can
[30:11] benefit from it.
[30:12] SPEAKER_01: But of course,
[30:12] SPEAKER_01: a lot of assessment has to be done so that before we get into work,
[30:16] we are able to be sure that we are able to live within what we
[30:21] expect to benefit
[30:22] SPEAKER_01: from that.
[30:23] SPEAKER_00: Speaking of diversifying your revenues,
[30:25] SPEAKER_00: one of the other things that was in the media,
[30:27] SPEAKER_00: Business Daily reported,
[30:28] SPEAKER_00: I believe,
[30:28] SPEAKER_00: last week,
[30:29] SPEAKER_00: Kenyan intends to get into the business of assembly,
[30:33] SPEAKER_00: of solar panels,
[30:34] SPEAKER_00: inverters,
[30:34] SPEAKER_00: panels,
[30:35] SPEAKER_00: batteries,
[30:35] SPEAKER_00: and that sort of thing.
[30:37] SPEAKER_00: And when we look at Kenyan manufacturing,
[30:39] SPEAKER_00: There's all sorts of problems that we often run into, right?
[30:41] Logistics,
[30:42] cost of labor,
[30:42] how competitive we really can be on price vis-a-vis other
[30:45] sectors.
[30:46] SPEAKER_00: So if you're making this pitch to shareholders,
[30:48] SPEAKER_00: for example,
[30:49] SPEAKER_00: the question they would ask is,
[30:50] SPEAKER_00: why would Kenjin be cost competitive in assembling inverters,
[30:54] SPEAKER_00: panels and batteries here,
[30:56] rather than just going to find a supplier somewhere in China
[30:58] and buying it directly
[30:59] SPEAKER_00: from source?
[31:00] SPEAKER_01: I think we have already mentioned that through our Green Energy Park,
[31:05] SPEAKER_01: we believe the cost of electricity in the Green Energy Park will be very
[31:09] SPEAKER_01: competitive.
[31:10] SPEAKER_01: And therefore,
[31:11] SPEAKER_01: if we are to set up our industry for making the solar panels there,
[31:15] SPEAKER_01: definitely,
[31:16] SPEAKER_01: again,
[31:16] SPEAKER_01: we shall benefit from the lower costs of electricity.
[31:20] SPEAKER_01: So that is what we are looking at.
[31:22] SPEAKER_01: We are actually opening up the market, being...
[31:26] SPEAKER_01: You say charity begins at home.
[31:28] We have set up a very potential green energy park that other
[31:32] people are going to benefit.
[31:34] How do we also come in and participate in also producing
[31:40] products that are useful
[31:41] SPEAKER_01: in the energy sector?
[31:42] You remember that we are now also getting into putting up solar
[31:47] power plants.
[31:48] Canadians are also getting into doing solar in their homes or
[31:53] in their small
[31:54] SPEAKER_01: industries to give captive power.
[31:56] So why can't we play in that space and take advantage of our
[32:01] low cost electricity
[32:02] at our green energy park to be able to produce these items at
[32:06] reasonable prices
[32:07] SPEAKER_01: that are competitive in the market?
[32:09] SPEAKER_00: Related to that,
[32:10] because I'm seeing some interesting conversations on the side
[32:12] with respect to what
[32:13] SPEAKER_00: you said a little earlier,
[32:14] SPEAKER_00: right?
[32:14] You don't want to disenfranchise Kenya Power when it comes to
[32:18] dealing with these
[32:18] SPEAKER_00: large commercial customers.
[32:20] So when you're having your discussions with the opposite number
[32:23] at Kenya Power,
[32:23] SPEAKER_00: how do you decide who gets what client?
[32:27] SPEAKER_00: Because on paper,
[32:28] SPEAKER_00: we'd say it's a free market,
[32:29] but are there rules of the road that you've agreed to between
[32:32] yourselves and Kenya
[32:33] SPEAKER_00: Power?
[32:33] And we will take on this kind of client and this kind of client
[32:36] will send to Kenya
[32:37] SPEAKER_00: Power instead.
[32:38] SPEAKER_00: What I said,
[32:38] SPEAKER_01: and maybe this is where I need to clarify,
[32:41] is the Energy Act 2019 allows the generators to supply
[32:48] electricity direct to
[32:49] SPEAKER_01: consumers.
[32:50] But you must ensure that you're not supplying the same clients
[32:55] that were being
[32:56] SPEAKER_01: supplied by Kenya Power.
[32:57] An organization can look at the costs from Kenjin and decide
[33:01] that we are going to
[33:02] SPEAKER_01: shift our plan from wherever it is
[33:04] SPEAKER_01: to Green Energy Park and continue producing the same products.
[33:08] SPEAKER_01: That will not be allowed.
[33:10] SPEAKER_01: But if we are able to get totally new clients that are not in this area,
[33:15] SPEAKER_01: then we can be able to negotiate with them.
[33:18] They will of course have the option of going to Kenya Power and
[33:21] as we are there and
[33:22] SPEAKER_01: looking at the cost of our electricity,
[33:24] I believe we should be able to look them in without interfering
[33:29] with the existing
[33:30] SPEAKER_01: clients from KPLC.
[33:32] SPEAKER_01: So it's not
[33:33] SPEAKER_01: A discussion that we are having between ourselves and KPLC.
[33:36] SPEAKER_01: We are there.
[33:36] SPEAKER_01: We are going to market our green energy park.
[33:39] SPEAKER_01: We are going to open that space.
[33:41] SPEAKER_01: And anybody who comes in,
[33:42] SPEAKER_01: of course,
[33:43] SPEAKER_01: we are going to look at all the parameters that will allow that client.
[33:48] SPEAKER_01: We are regulated by APRA, the industry.
[33:50] We have to actually get authority from APRA to be able to
[33:54] onboard these clients.
[33:56] SPEAKER_00: But this hypothetically indulges me with a strain of thought.
[33:59] SPEAKER_00: If,
[33:59] SPEAKER_00: for the sake of argument,
[34:00] SPEAKER_00: I see I'm buying power from Kenya Power,
[34:04] SPEAKER_00: 15 shillings a kilowatt hour,
[34:06] SPEAKER_00: Kenjin is maybe at seven.
[34:07] SPEAKER_00: If I essentially dissolve one company,
[34:10] SPEAKER_00: set up an entirely new one,
[34:12] SPEAKER_00: same shareholders doing roughly the same thing.
[34:15] SPEAKER_00: By definition, that would be a new client, wouldn't it?
[34:18] SPEAKER_00: What's to stop someone from using that route to say,
[34:20] SPEAKER_00: this is cheaper,
[34:21] SPEAKER_00: it makes sense for me,
[34:22] SPEAKER_00: it allows me to be a bit more profitable,
[34:25] SPEAKER_00: pay more taxes into the public system.
[34:27] SPEAKER_00: People could do that, couldn't?
[34:28] SPEAKER_01: I believe people might try that, but I think that will be very expensive.
[34:32] SPEAKER_01: If you have already set up an industry,
[34:34] SPEAKER_01: say Mombasa,
[34:36] it will be very costly for you to shut down that industry and
[34:39] shift it to Alcaria,
[34:40] SPEAKER_01: for example.
[34:41] SPEAKER_01: But again,
[34:42] SPEAKER_01: as I have mentioned,
[34:43] we already have the regulator and all these applications and
[34:47] the processing will
[34:49] have to go through the hands of the regulator to be able to
[34:51] determine whether this
[34:52] SPEAKER_01: is a client that we can go ahead with.
[34:55] So that will be able to help in that area and eliminate some of
[34:59] those challenges
[35:00] SPEAKER_00: that might arise.
[35:02] SPEAKER_00: I want to go back to the question around capital allocation,
[35:05] SPEAKER_00: because we spent the last 10,
[35:07] SPEAKER_00: 15 minutes talking about what's in the pipeline,
[35:10] SPEAKER_00: right?
[35:10] Developing this 1,500 megawatts or new generation capacity that
[35:14] includes somewhere
[35:15] SPEAKER_00: between 100 and 250 megawatts of battery storage.
[35:19] SPEAKER_00: These are often very capital intensive projects.
[35:22] SPEAKER_00: So if you're having to put this capital at risk,
[35:24] SPEAKER_00: will you be able to maintain your current dividend policy?
[35:28] SPEAKER_01: Yes, we look at whatever monies we are going to obtain through debt.
[35:34] We negotiate on reasonable interest rates and we consider at
[35:38] the end of the day,
[35:40] what are we going to get out of it and ensure that there is a
[35:43] markup that will be
[35:45] SPEAKER_01: able to help us to also give something back to the shareholders.
[35:49] SPEAKER_01: So that is a guiding principle,
[35:51] that we don't get into a project where we have not considered
[35:55] all the costs,
[35:57] SPEAKER_01: the cost of capital,
[35:58] SPEAKER_01: the cost of putting up everything that is required in that project.
[36:02] SPEAKER_01: And at the end of the day,
[36:03] be able to get a return on that investment that is reasonable
[36:07] enough to enable us
[36:09] SPEAKER_01: to pay something back to the shareholders at the end of the day.
[36:12] Because it is very important for us to maintain that level of
[36:16] policy on giving out
[36:17] SPEAKER_00: dividends year in,
[36:19] SPEAKER_00: year out.
[36:20] SPEAKER_00: We're just about to get to the close of our conversation.
[36:23] SPEAKER_00: I want to turn this into a future looking conversation.
[36:26] And you've spoken about the diversification efforts that are
[36:29] underway to try and
[36:30] SPEAKER_00: diversify the revenue sources that Kenjin has.
[36:32] I believe around 73% of your revenues last year came just from
[36:36] the sale of electricity.
[36:38] If we're having this conversation five years from now,
[36:40] what will that revenue mix look like?
[36:43] SPEAKER_00: How will that diversification of change between now and then?
[36:46] SPEAKER_01: Our projection number is in the next 10 years,
[36:49] SPEAKER_01: starting last year,
[36:51] we are working hard to build up the alternative revenue to the
[36:55] level of 20%.
[36:57] SPEAKER_01: Of course,
[36:57] that means we have to continue accelerating our diversification
[37:02] efforts so that we
[37:04] SPEAKER_01: can start bringing in these alternative revenues.
[37:06] SPEAKER_01: So I want to believe as we go on,
[37:09] SPEAKER_01: say we've started this year,
[37:11] SPEAKER_01: we go next year,
[37:12] SPEAKER_01: that projection will build up at the end of the 10 years to the 20%.
[37:17] SPEAKER_01: So perhaps in the next five years,
[37:19] we can be talking about 8% to 10% of the vaccination revenues
[37:24] coming through.
[37:25] Could you give us any more colour on how much of that would
[37:27] come in from selling of
[37:28] SPEAKER_00: carbon credits?
[37:30] If you have already 90% of the energy that you're selling into
[37:33] the grid coming in
[37:33] SPEAKER_00: from renewable sources,
[37:34] SPEAKER_00: wind,
[37:35] SPEAKER_00: solar,
[37:35] SPEAKER_00: geothermal,
[37:36] SPEAKER_00: hydro,
[37:37] SPEAKER_00: there's got to be demand for offset credits in the markets at the moment.
[37:41] SPEAKER_00: What's the growth potential for that particular revenue?
[37:44] SPEAKER_01: Carbon credit is another very good area if it is handled well.
[37:49] And we recently floated a tender for selling some of our carbon
[37:52] credits and we show
[37:54] SPEAKER_01: a lot of interest on it.
[37:55] SPEAKER_01: So that is an area that we believe going forward,
[37:58] all the projects that we are going to undertake and they are
[38:01] renewable energy
[38:03] SPEAKER_01: projects,
[38:03] SPEAKER_01: we are going to enlist them in that area of carbon credits.
[38:07] And therefore we should be able to get reasonable returns from
[38:11] it as an additional revenue.
[38:13] SPEAKER_00: Can you go into a bit more detail on that?
[38:15] SPEAKER_00: Because for a lot of the people who are listening to this conversation,
[38:17] SPEAKER_00: they'll be like,
[38:18] SPEAKER_00: okay,
[38:18] SPEAKER_00: hang on a minute.
[38:18] SPEAKER_00: How does this work?
[38:20] If we're selling the quote-unquote the right to offset the
[38:23] emission of a ton of
[38:24] SPEAKER_00: CO2,
[38:26] SPEAKER_00: where does the sale happen?
[38:27] SPEAKER_00: Under what rules?
[38:29] SPEAKER_00: Does the money come directly to you?
[38:30] SPEAKER_00: Does it go through a market somewhere in Europe?
[38:32] SPEAKER_00: Give us the details on this.
[38:34] SPEAKER_01: The idea of carbon credits,
[38:36] because they are institutions or organizations that are really
[38:39] discharging a lot of
[38:41] SPEAKER_01: CO2 into the atmosphere through their production of whatever they are
[38:44] SPEAKER_01: manufacturing.
[38:46] They are supposed to offset that using other organizations that
[38:51] are not harming the
[38:52] SPEAKER_01: atmosphere by discharging these greenhouse gases.
[38:55] There are organizations that actually handle the carbon credits
[38:59] through some
[39:00] SPEAKER_01: regulations that are there.
[39:02] SPEAKER_01: And that means if you intend to benefit from carbon credit sale,
[39:06] SPEAKER_01: then whatever projects you are talking about,
[39:09] you have to enlist it in that category right from the inception
[39:13] when you're
[39:14] SPEAKER_01: building up that project.
[39:15] SPEAKER_01: Like,
[39:15] SPEAKER_01: for example,
[39:16] if you're planting trees and you want the trees to be
[39:18] considered for carbon
[39:19] SPEAKER_01: credits,
[39:19] SPEAKER_01: when you identify the portion that you're going to plant trees,
[39:26] SPEAKER_01: If you are doing a power plant,
[39:27] SPEAKER_01: a geothermal power plant,
[39:29] you can list it right from the onset and looking at it by
[39:33] generating electricity
[39:35] SPEAKER_01: using geothermal.
[39:37] SPEAKER_01: If the same amount of electricity was to be generated using fossil fuels,
[39:42] How much carbon would you discharge to the atmosphere and
[39:45] greenhouse gases that
[39:46] SPEAKER_01: would affect our climate?
[39:48] SPEAKER_01: And if that is now,
[39:50] SPEAKER_01: you're using this at your thermal,
[39:52] SPEAKER_01: you are not discharging this,
[39:53] SPEAKER_01: then that is how you are able to trade your carbon credits.
[39:56] It's a technical area and perhaps we may require the experts
[40:00] who deal with that to
[40:01] SPEAKER_01: be able to unravel exactly what happens in that area.
[40:06] SPEAKER_00: And just for a bit of context for our listeners tonight,
[40:08] SPEAKER_00: if you look at Kenton's results in 2023,
[40:10] there's about 4.26 billion shillings that came in with respect
[40:14] to revenue from
[40:15] SPEAKER_00: carbon credits.
[40:16] It's listed under other income is notes section eight under the
[40:20] notes to the
[40:20] SPEAKER_00: financial statements.
[40:21] SPEAKER_00: If you want to get a deep dive into that,
[40:23] SPEAKER_00: definitely worth reading that part of the annual report.
[40:26] SPEAKER_00: We're coming to the end of our conversation at the moment.
[40:29] SPEAKER_00: Engineer, what are the most common misconceptions
[40:32] SPEAKER_00: that you still run into, that you still hear about Kenjin.
[40:35] SPEAKER_00: The company,
[40:35] SPEAKER_00: as you said,
[40:36] SPEAKER_00: has been around for 71 years,
[40:38] SPEAKER_00: but for a lot of consumers,
[40:40] SPEAKER_00: Kenjin is not necessarily a company that they're familiar with.
[40:44] SPEAKER_00: So I'm curious what sort of misconceptions you run into along the way.
[40:47] SPEAKER_00: Of course,
[40:48] SPEAKER_01: people mistake that Kenjin is part of Kenya power,
[40:53] SPEAKER_01: but it is important that people understand that Kenjin is an independent
[40:58] organization whose mandate is specifically to generate
[41:03] electricity for the economy
[41:04] SPEAKER_01: of this country.
[41:06] And going forward,
[41:07] of course,
[41:07] you can see that we are also opening up the market in the
[41:10] region.
[41:10] So we shall be participating in selling our electricity also to
[41:14] the East African power pool.
[41:16] SPEAKER_01: which can also help the other countries in the region.
[41:18] SPEAKER_01: So we generate power,
[41:21] SPEAKER_01: and currently we only have one off-taker,
[41:24] SPEAKER_01: and that is Kenya Power,
[41:25] SPEAKER_01: whom when we generate through Ketraco,
[41:28] SPEAKER_01: who are the transmission company,
[41:29] SPEAKER_01: they transmit that power to Kenya Power,
[41:32] and Kenya Power distributes and supplies electricity to the
[41:36] homesteads or the
[41:37] SPEAKER_01: factories that require that power.
[41:39] SPEAKER_01: Just to clarify that Kenjen is an electricity-generating company,
[41:43] It is not wholly owned by the government because that is also
[41:46] another misconception.
[41:47] SPEAKER_01: We are listed in the Nairobi Securities Exchange.
[41:52] SPEAKER_01: We are 70% owned by the government and 30% owned by private investors.
[41:58] SPEAKER_01: And that is important for everybody to know.
[42:02] SPEAKER_01: We are opening up our area of operations.
[42:05] SPEAKER_01: As I said earlier, we are diversifying.
[42:08] SPEAKER_01: We are looking at,
[42:10] SPEAKER_01: at one point,
[42:11] being able to sell power directly to customers because that has
[42:15] now been allowed by
[42:17] the new energy act and the regulations are in the process of
[42:20] finalization and we
[42:22] SPEAKER_01: shall be able to sell power to customers directly.
[42:25] SPEAKER_01: So we don't sell power directly at the moment to any clients.
[42:30] There's an interesting question that's come up related to that
[42:32] very question.
[42:33] SPEAKER_00: Denis Karima is asking if you would consider billing in U.S.
[42:37] SPEAKER_00: dollars for institutional buyers,
[42:38] SPEAKER_00: for example,
[42:39] SPEAKER_00: would come to the Green Energy Park,
[42:40] like the interest that you've gotten there from someone who
[42:42] wants to set up a data
[42:44] SPEAKER_00: center there,
[42:44] SPEAKER_00: for example.
[42:45] And his arguments that might help with both your foreign debt
[42:48] liabilities,
[42:49] SPEAKER_00: but also in terms of covering your future capex.
[42:52] SPEAKER_00: Is that something you'd consider?
[42:53] SPEAKER_00: That is a very interesting question because that is a big option.
[42:57] I know that will require approvals from perhaps National
[43:01] Treasury for us to be able to do that.
[43:03] But we would definitely venture into it and do a recommendation
[43:07] because it becomes
[43:08] easier when you trade in a foreign currency because it will
[43:11] help us to improve our
[43:13] SPEAKER_01: reserves on foreign currency.
[43:15] SPEAKER_00: One last question before I bring this to a close, also from Dennis.
[43:19] And this sort of loops back to what we were discussing earlier
[43:21] around the question
[43:22] SPEAKER_00: on manufacturing.
[43:23] How would you be able to handle the end-of-life disposal
[43:26] process for solar panels
[43:28] and batteries if you're going to go into the manufacturing of
[43:31] these devices in the
[43:32] SPEAKER_00: country?
[43:33] I want to believe that the studies are going on how to dispose
[43:37] these solar panels
[43:38] SPEAKER_01: because it's not in big quantities.
[43:41] SPEAKER_01: There must be ways of disposing them, and that is something that Kenjin
[43:46] would really consider because we don't want to get into
[43:49] problems when we have all
[43:51] SPEAKER_01: these panels and yet you're unable to dispose them.
[43:54] So there will be a process and that will be followed very
[43:58] clearly so that we are
[44:00] SPEAKER_01: able to dispose as per lay down regulations.
[44:03] SPEAKER_00: All right, I guess we'll have to leave it there.
[44:05] SPEAKER_00: Any last words, Cusineer?
[44:07] SPEAKER_01: Thank you very much for having us to discuss KenGen.
[44:10] We want to assure our shareholders that we are working very
[44:15] hard to ensure that we
[44:16] continue generating power and provide power as it is required
[44:20] in this country.
[44:21] SPEAKER_01: We are working on improving our technology,
[44:24] SPEAKER_01: ICT,
[44:25] SPEAKER_01: to ensure that with the introduction of AI and Internet of Things,
[44:30] We are able to utilize the data we collect from our machines so
[44:34] that we carry out
[44:35] what we call predictive maintenance so that we don't have to
[44:38] wait until a machine
[44:39] SPEAKER_01: breaks down.
[44:40] We are able to assess and be able to maintain our machines
[44:43] before they break down.
[44:44] Now that will ensure that our availability of the machines is
[44:47] increased going into the future.
[44:48] So we are going to also work hard in the area of adapting new
[44:53] technologies as we move forward.
[44:55] We are aware that even the generating machines that are coming
[44:58] up now are more efficient.
[45:00] SPEAKER_01: And that's why,
[45:00] SPEAKER_01: as I said earlier,
[45:01] SPEAKER_01: the old machines,
[45:03] SPEAKER_01: when they come to the end of their life,
[45:05] SPEAKER_01: will shut them down and put the power plant down and build up new ones.
[45:10] SPEAKER_01: For example,
[45:11] SPEAKER_01: in geothermal,
[45:12] to utilize the same steam because steam is still available and
[45:15] be able to generate
[45:16] SPEAKER_01: more power with new technologies.
[45:18] SPEAKER_01: Thank you.
[45:19] SPEAKER_00: All right, then.
[45:20] SPEAKER_00: Asante Sana, thank you, everyone, for your time this evening.
[45:22] SPEAKER_00: We've been speaking with engineer Peter Owerunchenga.
[45:25] He's a managing director at Kenjin,
[45:27] the largest electricity generator in this corner of Africa.
[45:30] SPEAKER_00: There's plenty more,
[45:31] SPEAKER_00: of course,
[45:31] SPEAKER_00: you could go through in a bit more detail if you had a bit more time.
[45:34] But nonetheless,
[45:35] a couple of linked resources on the tweet to their 2024 annual
[45:38] report.
[45:39] SPEAKER_00: That's certainly worth reading.
[45:40] SPEAKER_00: We'll try and find you a copy of the LCPDP,
[45:42] SPEAKER_00: the Least Cost Power Development Plan,
[45:44] because I'll give you a very broad overview of how the
[45:46] government is thinking about
[45:47] SPEAKER_00: investing in
[45:48] SPEAKER_00: bringing more generation and transmission capacity online.
[45:51] So when you have time,
[45:52] it's a bit dense,
[45:53] but it's 100% worth looking at in detail.
[45:56] Asante Sanda to the team with Kenjen and of course to you for
[45:58] listening to us over
[45:59] SPEAKER_00: the last hour.
[46:00] SPEAKER_00: Thank you for your time.
[46:01] SPEAKER_00: Have a good evening.

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