The Kenya Power & Lighting Co. Ltd. INVESTOR BRIEFING
By
The Kenya Power & LightingThe Kenya Power & Lighting Company Limited
Date: 8th November 2010
The Kenya Power & Lighting Co. Ltd.
KPLC OverviewKPLC Overview
Company Strategy
Financial Highlights
Transaction structure
Conclusion
KPLC at a GlanceThe Kenya Power & Lighting Co. Ltd. KPLC is a Kenya‐based company, engaged in the
transmission distribution and retail of electricitytransmission, distribution and retail of electricity.Purchases electricity in bulk from Kenya Electricity Generating Company Limited (KenGen), g p y ( ),Independent Power Producers (IPPs), Uganda Electricity Transmission Company Limited (UETCL) d T i El t i S l C Li it dand Tanzania Electric Supply Company Limited
(TANESCO).Manages an electricity network of more thanManages an electricity network of more than 30,000 kilometers. Operates in four major administrative regions, p j g ,including Nairobi, Mount Kenya, Coast and West.
Investment Rationale in the Energy Sector
The Kenya Power & Lighting Co. Ltd. Electricity demand drivers
L t ti l k t d t t l Large potential power market due to current low population connectivity vis an viz the size of the economy est. at 25%.
Economic recovery & expansion to sustain growth in energy consumption
P d il li d d t f LProposed new railway line and second port of LamuProspects of oil and natural gas discovery in Isiolodistrictdistrict
Booming construction and tourism sectorsOngoing mining projects e.g. Tiomin, gold in Transmara
Investment Rationale in the Energy Sector
The Kenya Power & Lighting Co. Ltd. Development in the power subsector
Increased Government involvement & investment in Increased Government involvement & investment in power infrastructural development e.g. creation of Ketraco, Energy Scale Up Programme targeting 1million new households in the next 5 yrs at cost of Shs. 84 billion
Progression of Regional Interconnection projects withProgression of Regional Interconnection projects with neighboring countries e.g. Southern Africa Power Pool, Ethiopia
Public private partnership framework to facilitate procurement on new projects that augment capacity e.g. geothermal, wind g g ,
Supply and Demand Situation in Kenya
The Kenya Power & Lighting Co. Ltd.
Indicator 2007/08 2008/09 2009/10Indicator 2007/08 2008/09 2009/10
Peak Demand MW * 1,036 1,072 1,107
ll d **Installed Capacity MW ** 1,310 1,345 1,473
Effective Capacity MW ** 1,267 1,280 1,416
Reserve Capacity Margin % 12% 9% 15%
Note: * Current peak demand is 1,132 MW recorded in October 2010.
**Includes 60MW of Emergency capacity in 2009/10.
The Kenya Power & Lighting Co. Ltd.
KPLC OverviewKPLC Overview
Company Strategy
Transaction structure
Financial Highlights
Conclusion
KPLC’s Key Strategic Pillars
The Kenya Power & Lighting Co. Ltd.
Diversification & Innovation PillarAlt ti f l
KPLC’s Achievementsleasing out extra capacity to licensed telecommunication operators Signed Alternative sources of energy e.g. solar,
wind, geothermal, wavesFiber Optic BusinessPrepayment & prepaid serviceSt t i lli d ll b ti ith
telecommunication operators. Signed contract to generate revenue of Shs 200 m pa projected to grow to Shs 500 M pa by 2014the infrastructure for data services andStrategic alliances and collaboration with
other service providersthe infrastructure for data services and internal telephone services – est. cost saving Shs 64m p.a.
Robust Network/Infrastructure PillarT&D system expansion & reinforcementT&D t t ti d h i ti
KPLC’s AchievementsConstruction of over 16,000 km of T&D.I l t ti f tT&D system automation and mechanization
Mechanization & automationSecuring the network against vandalismOutsourcing construction capacityI b ild d d i th T&D t k
Implementation of system reinforcement substationsAnti power theft campaignUse of dry transformers to reduce andalismIn build redundancy in the T&D network
Adopting new & emerging technology vandalismAutomatic meter reading for 4,000 large customers
KPLC’s Key Strategic Pillars
The Kenya Power & Lighting Co. Ltd.
Adequate & Secure Sources of Power PillarCost efficient sources of power
KPLC’s AchievementsNet increase of 330MW in effective Cost efficient sources of power
Optimizing generation mix (Hydro, Geothermal, Thermal, Wind, Imports)Promoting Green EnergyRegional Power Pool i e Interconnection
capacity excluding emergency plants 5 power plants with a capacity of 400MW –negotiations in the final stages
Regional Power Pool i.e. Interconnection and energy trading with neighboring countries.
Customer Service PillarTimely connectionsRoll out of pre paid service
KPLC’s AchievementsIntensified marketing e.g. Umeme Pamoja Group schemesNew customers connection policyRoll out of pre‐paid service
Timely response to customer complaints & queriesEstablish customer service centers/national call centre
New customers connection policyImplementation of customer charter and service delivery standardsSMS alerts to warn customers of pending disconnection and bill enquiry via SMScenters/national call centre
Improve meter reading & billingdisconnection and bill enquiry via SMSRoll out of prepaid metering – over 300,000 meters to be implemented in Dec 2010
KPLC’s Strategic Pillars
The Kenya Power & Lighting Co. Ltd.
Financial PillarEfficient use of resources
KPLC’s AchievementsRevision of KenGen & Iberafrica bulkEfficient use of resources
Cost control managementTechnical & commercial loss reductionEfficient revenue collectionCapital Base Restructuring
tariff;Capital base restructuring currently inprogressSystem efficiency increased from 81% toCapital Base Restructuring
Affordable sources of investment capitalEffective pricing
y y84%
Human Resource PillarContinuous Training
KPLC’s AchievementsOrganizational cultural changeRebranding of KPLC redefinition ofg
Retention of motivation of quality staffTalent pool buildingInspirational leadershipCulture Change
Rebranding of KPLC – redefinition ofvision, values, core values etc.
gProductivity & performance management
KPLC’s Strategic Pillars
The Kenya Power & Lighting Co. Ltd.
Corporate Social Responsibility PillarKPLC’s Achievements
I l t d S d GCorporate Social Responsibility PillarGive back to the societySupport government on socio‐economic initiativesPromote use of green energy
Implemented Sound Governance Practices.Recognized as the Company with thebest Governance Practices – Fire AwardsParticipated in National AfforestationPromote use of green energy
Promote safe environment practicesStakeholder responsibility & accountabilitySocially sensitive investment decisionsAdherence to sound and ethical
Participated in National AfforestationinitiativesGiving more support to socials causesespecially medical and educationalinstitutionsAdherence to sound and ethical
governance practicesinstitutions.
The Kenya Power & Lighting Co. Ltd.
KPLC OverviewKPLC Overview
Company Strategy
Financial Highlights
Transaction structure
Conclusion
Sustainable Growth Momentum…
The Kenya Power & Lighting Co. Ltd. Units Sold (GWh)
Sustainable Growth Momentum…
The Kenya Power & Lighting Co. Ltd.
4,782
5,633 5,675
5,949 Profit before Tax Operating Income
2,498 2,649 2,738
2,206 2,382
3,522
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
60,728
71,564
80,213
20,560 22,249
23,882
26,848 28,741
Total Assets Shareholders Funds
39,644
48,237
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Planned Power Initiatives
The Kenya Power & Lighting Co. Ltd.Initiative Status of Project
East African Power Master Plan Completed in March 2005
Kenya Tanzania Interconnection Project
Feasibility study completed in Nov. 2002Construction contract negotiated in 2006/07
Tanzania ‐ Zambia InterconnectionProject
Transaction advisor engaged to assist in packaging the project for financing and implementation
Eastern Africa Power Pool (EAPP) Launched in Feb. 2005 and headquartered in Addis Ababa
Nile Basin Initiative (NBI) Feasibility study done Feb 2006 with detailed d & h fdesigns & the four interconnection projectsProject is at procurement stage now
Ethiopia – Kenya Interconnector Feasibility Study completed in March 2009Ethiopia Kenya Interconnector Feasibility Study completed in March 2009AfDB, DBSA & World Bank expected to co‐finance the project
New Generation Plants (5 year period)
The Kenya Power & Lighting Co. Ltd. Project Energy Source Capacity
(MW)Expected Date
2009/10 Tana Redevelopment Hydro 20 Nov 2010
2010/11
Olkaria well head Geothermal 70 June 2011
Kipevu MSD Thermal 120 Dec 2010/
2011/12
Athi River MSD Thermal 80.9 Feb 2012
Athi River MSD Thermal 84 April 2012
Thika MSD Thermal 87 June 2012
Sangoro Power Plant Hydro 21 Dec 2011
Eburru Geothermal 2.2 Dec 2011
Ngong Wind Phase 11 Wind 15 Dec 2011
Aeolus Wind Wind 100 Jan 2012
New Generation Plants (5 year period)
The Kenya Power & Lighting Co. Ltd. Project Energy Source Capacity
(MW)Expected Date
2012/13
Turkana Wind Wind 300 March 2013
Olkaria 1 Extension Geothermal 140 June 2013
Kindaruma Upgrade Hydro 32 June 2013
2013/14 Athi River Mining Coal Coal 19.5 Dec 2013
Olkaria IV Geothermal 140 Dec 2013
Olkaria 111 Geothermal 52 Dec 2013
Mombasa Coal Plant Coal 300 Dec 2013
Ethiopia Import Import 200 Dec 2013
TOTAL MEGAWATTS 1 783 6TOTAL MEGAWATTS 1,783.6
Benefits of the Generations Plants Adequate energy capacity to meet increasing demand Diversified sources of energy Diversified sources of energy Establishment of sufficient reserve capacity to mitigate against any
revenue losses
Committed Transmission Projects
The Kenya Power & Lighting Co. Ltd.
Transmission Line Length Est Cost. (USD$mil.)
Commissioning Date
1 Kamburu Meru 132kv single circuit 124 9 9 20101 Kamburu ‐Meru 132kv single circuit 124 9.9 2010
2 Chemosit ‐ Kisii 132kv single circuit 64 5.1 2010
3 Rabai ‐ Galu 132kv single circuit and Galu Sub station
48 3.6 2010
4 Reactive Compensation Phase 1 ‐ Nrb Transmission system
17 2011
5 Kilimambogo ‐ Thika ‐ Githambo ‐Kiganjo 132kv single circuit
135 10.8 2011
6 Mumias – Rangala 132kv single circuit 35 2.8 2011
7 Sangoro – Sondu 132kv 5 2 2011
8 Mombasa – Nairobi 400KV double circuit 450 135 2012
9 Kenya (Lessos) – Uganda (Tororo) 220kv single circuit
250 24 2012
10 Rabai – Malindi – Garsen – Lamu – Garrissa 220kv single circuit
250 33.9 2012
11 Uprate Embakasi from 180MVA to 270 MVA 2.25 2010
TOTAL 246.35
The Kenya Power & Lighting Co. Ltd.
KPLC OverviewKPLC Overview
Company Strategy
Financial Highlights
Transaction structure
Conclusion
Transaction Structure
The Kenya Power & Lighting Co. Ltd.
Redemption and Issue of Shares to GoKpRedemption of 794,962,491 7.85% RPS @ Shs. 207.50 based on VWAP
&
issue of 76,622,891 ordinary shares to GoK
Redemption of 794,962,491 7.85% RPS @ Shs. 207.50 based on VWAP &
issue of 76,622,891 ordinary shares to GoK
Sh S litShare Split
Proposed Share Split 8:1 Proposed Share Split 8:1
Rights IssueFloatation of 488 630 245 new ordinary shares to existing shareholdersFloatation of 488 630 245 new ordinary shares to existing shareholdersFloatation of 488,630,245 new ordinary shares to existing shareholders Entitlement Ratio : 20 new ord. shares for every 51 ord. shares held
Floatation of 488,630,245 new ordinary shares to existing shareholders Entitlement Ratio : 20 new ord. shares for every 51 ord. shares held
Objectives of the Capital Base Restructuring
The Kenya Power & Lighting Co. Ltd. Create an equitable position amongst
shareholders (Ordinary & Preference)shareholders (Ordinary & Preference)
Improve KPLC’s creditworthiness by reducing its p y gleverage.
E bl KPLC i it l f th C it l Enable KPLC raise capital from the CapitalMarkets.
Synchronize KPLC’s Nominal Share Value with theMarket.
Benefits of the Entire Transaction
The Kenya Power & Lighting Co. Ltd. • Strengthen KPLC Balance Sheet to enable the company
raise funds through the issuance of infrastructure bonds.
• Deepen capacity of the energy sector through a stronger
KPLC.
• Broaden the base of ownership in KPLC by GoK not takingoade t e base o o e s p C by Go ot ta g
up its rights.
• Reduce pressure on KPLC to pay Fixed InterestReduce pressure on KPLC to pay Fixed Interest.
• Obtain additional Risk Equity Capital through the
conversionconversion.
Use of Proceeds of the Rights Issue
The Kenya Power & Lighting Co. Ltd.
Projects Cost (Shs
Capacity Enhancement & System Reliability Distribution Projects
( hProjects Cost (ShsMillions)
Likoni Rd S/S 270 City Square 66/11kv S/S 357
Projects Cost (ShsMillions)
Muhoroni‐Ahero‐Kisumu East 33kV link 125
Obote1& 2 Breweries lines 45Eastleigh 66/11kv S/S 292 Kasarani 66/11kv ((St. Lucie Kiriri University) 285 Kikuyu S/Stn Reinforcement 80 Dagoretti Substation 273
Obote1& 2, Breweries lines reconductoring
45
Kisian‐Nyaminina 33kV line 100 Kisii ‐ Oyugis 33kV line 63 New DCK ‐ Suswa 33kV feeder 50
Embu East substation 150 3rd Nairobi West‐Embakasi 66kV line 40 Ruaraka‐Parklands 66kV UG lines 261 Steel Billet‐Jevanjee 66kV link 11
New DCK Suswa 33kV feeder 50
Olkalou‐Wanjohi 33kV interconnector 50
Olkalou‐Gilgil 33kV interconnector 75
Kiganjo 33/11kV relocation 156Steel Billet Jevanjee 66kV link 11 Msambweni ‐ Lunga Lunga 33kV line 120 Jomvu 132/33kV substation 540 Kainuk (Turkwel) 220/33kv Substation 550
h / k /
Kiganjo 33/11kV relocation 156
Thika Industrial substation 230
Kathera 33/11KV S/S 160
Mangu 33/11KV S/S 150 Bahati Dc 33/11kv S/S 150 Bayete ex Lessos fdr 75 Kisumu Musaga 2nd 33kV line 175
Mangu 33/ KV S/S 50
Kiganjo‐Nanyuki 2nd 33kV line 150
TOTAL DISTRIBUTION PROJECTS 4,983
Use of Proceeds of the Rights Issue..Cont..
The Kenya Power & Lighting Co. Ltd. Supply Reliability & Power Quality Projects
Projects Cost (Shs Millions)
Reactive compensation project 800Thika Road National Control Center 2,000
TOTAL TRANSMISSION PROJECTS 2,800
Revenue Enhancement & Protection Project
Projects Cost (Shs Millions)
Prepaid Metering System 2,500
The Kenya Power & Lighting Co. Ltd.
KPLC OverviewKPLC Overview
Company Strategy
Financial Highlights
Transaction structure
Conclusion
Conclusion
The Kenya Power & Lighting Co. Ltd.
• Our growth momentum will be sustained going
forward.
• Funds raised through the CBR exercise will be wellFunds raised through the CBR exercise will be well
utilized to boost future earnings.
• We welcome investors to support the CBR exercise.
THANK YOUTHANK YOU
The Kenya Power & Lighting Co. Ltd.
Q&AQ&A