Business

Kenya Power borrows KSh 6.8 Billion from NCBA

Kenya Power, the state-owned power distributor, has borrowed a loan worth KSh 6.750 Billion from NCBA, pushing the bank to the biggest local lender to the state firm.

NCBA provided this 12-year loan on October 9th 2020, at an interest rate of 12% with a repayment date of 3rd October 2032, according to details in the latest Annual Report by Kenya Power for yeae ended 30th June 2021.

NCBA now joins other local lenders such as Standard Chartered Bank, which is owed KSh 6.1 Billion to be repaid by 23rd June 2023 and Equity Bank Medium Term Loan of KSh 4.1 Billion to be repaid by 30th September 2025.

Kenya Power has also borrowed commercial loans from Government of Kenya, Rand Merchant Bank, Stanbic Bank and other development agencies, a totaling to a debt load of KSh 106.9 Billion as at  30th June 2021.

The electricity distributor mentions in the annual report that its financial risk and performance indicators was adversely affected by the Covid-19 pandemic, high provisions, cost of power purchase and accruing debt. 

It  projects that there will be a financial recovery in the near-to-midterm if the Company implements the necessary mitigation measures and initiatives to stem the challenges.

The firm’s pre-tax profit  grew by 216% from a loss before tax of KShs 7.042 billion reported in June 2020 to a pre-tax profit of KSh 8.198 billion.

Kenya Power aims to leverage on the debt repayment moratorium by the Government as well as the combined effect of the other financial recovery initiatives, to restructure its commercial debt.

The increased availability of cash from the extended debt tenors, and lower finance cost obligations resulting from negotiating lower interest rates on existing debt facilities, will be used to accelerate payment of outstanding trade payables.

Expressions of Interest (EOI) for the commercial debt refinancing were invited in April 2021 and Request for Proposals were issued to the bidders with a closing date of 6 August 2021.

READ; KenGen Penalties to Kenya Power Hit KSh4 Billion

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