Kenya Power's Share Plan Means `Re-Nationalizing,' World Bank's IFC Says

Plans by Kenya Power & Lighting Co. to convert government-owned preference shares to ordinary shares will amount to “re-nationalizing” the company, according to the International Finance Corp.

“It’s fundamentally moving away from the successes” Kenya’s government has achieved in selling off state assets, Ram Mahidhara, principal investment officer in the IFC’s infrastructure department, said in an interview in Johannesburg today. The IFC is the World Bank unit for lending to companies.

Kenya Power, the country’s monopoly power distributor, said on Nov. 20 it plans to convert the government’s shares as part of a reorganization of its capital structure. The Privatization Commission said on Dec. 1 it plans to sell or lease as many as 26 state-owned companies and assets by 2012 to boost industries including tourism and agriculture.

“What the government has done on privatization is very good and we’d like to see it continue,” said Mahidhara. The Kenya power plan is “a little surprising, given that Prime Minister Raila Odinga is from the private sector. It’s going counter to what we would normally expect.”

Ahmed Kassam, special adviser to Odinga, declined to comment when interviewed in Johannesburg today. Kenya Power spokesman Kevin Sang also declined to comment.

Kenya Power’s shares rose 0.5 percent to 2 shillings as of 2:43 p.m. in Nairobi today, giving the company a market value of 15.8 billion shillings ($194 million).

To contact the reporters on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net

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