KenGen Sets Up Subsidiary for its non-electricity generating business

Power producer KenGen says it is awaiting regulatory approvals to launch a subsidiary that will oversee its non-electricity generating business.

The subsidiary, named KenGen Energy Services (KES), will handle diversified business segments that will be hived off from KenGen, leaving the mother company to handle power production and sales.

KenGen has in the recent past diversified its revenue streams to include the sale of geothermal steam to flower firms in Naivasha, drilling geothermal wells for other firms, running its geothermal spa in Olkaria and a planned industrial park.

It is also offering energy consultancy services to power sector players in the country and the region.

Chief Executive Rebecca Miano said in an interview with The Standard the subsidiary would also explore other revenue streams as the firm looks to grow revenues while reducing reliance on energy generation.

She said the initiative was also aimed at enabling KenGen to focus on its energy generation business, which she said would remain its core business.

“KenGen would like to diversify revenue streams. So far, there are few things that we have been doing alongside our generation business, especially consultancy in the area of geothermal. We have also been getting proposals from companies interested in drilling and would like KenGen to offer them commercial drilling services,” said Ms Miano. See Also: South Africa firm dilutes Kenya’s stake in KenGen

“We also have a spa that has an element of tourism and other services. The subsidiary will consolidate all these non-generation activities into one so that they are more structured and we are also able to have KenGen concentrate on the generation business.”

The new revenue streams are becoming critical in growing the firm’s revenues. Over the financial year to June, KenGen earned Sh5.2 billion from the sale of geothermal steam to flower firms neighbouring its fields in Olkaria, although this was a decline from the Sh6.8 billion the company raked in the previous year.

Revenue from the sale of electricity is, however, still the bread and butter for the company and stood at Sh29.3 billion in the year to June this year.

Other players

The new firm, Miano said, would have its own management team.

“There is a proposal to have its own structure but with oversight from KenGen. It will have a lean structure.”

Diversification is expected to enable the firm to grow revenues and shareholder returns at a time when there is an increased number of power producers coming into the Kenyan market and who are expected to start feeding electricity to the national grid in the next few years.

They include Lake Turkana Wind Power, which is expected to start feeding 310MW of wind-generated power into the grid next year.

Source; The Standard