There is no waxy oil, this is gabbage media likes to spew every once in a while. They said Uganda had waxy oil, which was gabbage and now I see they are talking about Kenya's oil being waxy. All I am saying is that Kengen is wittingly or unwittingly wrecking shareholder value through it's inefficiently organized financing. Now they want 120B equity for power projects this just means super dilution of existing shareholders to allow other big boys to come in meaning we are unlikely to ever get decent returns yet with a bit of financial engineering Kengen can deliver massive value for shareholders. My issue is that the need to maximize profitability of projects and not just create because there is mirage 2030, possibility of an electric rail etc. What if Mirage moves further and the electric train is out by 2 years, shareholders are toast. Already Kipevu III financed by Kengen Infrastructure bond is burning shareholders in a way.

The commissioning of the 115MW Kipevu III MSD plant in March 2011 without corresponding increase in the transmission capacity between Mombasa and upcountry has led to an increase in transmission losses on the Rabai‐Nairobi, Rabai‐Kiambere as well as the lines between Nairobi and the hydros. This situation will prevail until the
400KV Mombasa‐Nairobi line is put into service

The Water Resources Management Authority has charged KenGen a water levy of Kshs 0.05/kWh for electricity generation from hydro sources. KPLC has included this charge to the energy charge rate for KenGen hydros in determination of the proposed base revenue requirement.

Some Local Authorities, Kenya Wildlife Service, Kenya Forest Services and Kenya
Railways have variously imposed fees and charges for way‐leave rights that may be granted
within their jurisdiction. The demand by local authorities and other government agencies,
including the effect of the Roads Act, and the estimated expected claims from individual
landowners would demand extra revenue of approximately Kshs 4.5 billion as detailed in
Table 7 which would result to an increase in the retail tariff energy charge of Kshs
0.81/kWh. This revenue requirement does not include the extrapolated debt arrears of
Kshs 8.2 billion which also need to be considered in the resolution of this issue

Just looking at recent Kengen accounts and i have noted the following:

The Nyayo government totally ignored the energy sector and there were virtually no new projects brought online between 1988 and 2003. Between 2003 and 2011, Kengen installed 465MW, 200MW being stop-gap thermal projects.

Kengen is carrying out the 2008-2018 projects in two phases , Horizon 1 (700 MW) to be completed by 2015 and Horizon 2 (1,100 MW)to be completed by 2018.

Horizon one has delivered 270MW so far, 120MW thermal (Kipevu III) and 150MW from a combination of small green sources like wind, geothermal and hydro.

The flagship projects for Horizon 1, Olkaria IV and Olkaria I unit 4 and 5 are set to be commissioned in 2014 and will deliver 140MW each.

The main projects for Horizon 2 are: two further Olkaria projects (310MW), Kilifi coal plant (600MW) and a natural gas plant (300MW.

While the capital employed has balloned from KShs 95B to 150B in the last 5 years, the revenue averaged KShs 10.7B between 2007 and 2010. This only went up to 13B in 2011 when Kipevu III and the small green projects were commissioned.

The next major jump in revenue is not expected until 2015 when the 280MW Olkaria projects are commissioned. There will be a small increase in revenue in 2014 when Muhoroni Thermal (80MW) is commissioned.

GOK owns 70% of the company, nssf 1.3%. Of the 204,000 shareholders, 200,000 are Wanjikus owning 100-10,000 shares.

In conclusion Kengen is a capital hungry company carrying out projects for vision 2030. The company, while growing its assets is not likely to increase its earnings meaningfully till 2015.

The current "Wanjiku heavy" shareholding structure only gets excited by a growth in earnings and dividend.

The company does not have institutions who might get excited by the growth in assets, hence the reason why the company is trading at P/B of 0.3.

GOK obviously does not care for dividends but i foresee the company continuing with the KShs 0.5 Div per year policy, whether the money is borrowed or not, to appease Wanjiku.

Meanwhile Kengen has loans of KShs 68B as at 2011 and has capital commitments of KShs 153B. I think time is right for GOK to do the second IPO, possibly followed by a rights issue.

I don't expect major upwards price movements, driven by fundamentals before year 2015.

@Sparkly;
If you read their past financial year annual report
the following are the projects planned to implement between 2015 and 2020
Olkaria I Unit 6 70MW
Olkaria V 140MW
Olkaria VI 140MW
Olkaria VII 140MW
Olkaria VIII 140MW
Karura Hydro power 90MW
Meru Wind 100MW
Kilifi coal plant (600MW) and Natural gas plant (300MW) have been shelved.

Our amateur analysis in August 2012. Most have come to pass, except the second IPO which has been overtaken by a massive Rights.