Nov. 11 (Bloomberg) -- Kenya Power Ltd., the country’s sole electricity distributor, is considering selling Eurobonds to help fund its expansion plans and reduce its exposure to the domestic currency, Acting Managing Director Ben Chumo said.
The company, based in Nairobi, plans to start the process of obtaining a credit rating after its annual shareholder meeting on Nov. 29, Chumo said in an interview at his office in the Kenyan capital on Nov. 6. A sale of Eurobonds will probably take place “at the beginning of next year,” he said.
“It will be very limiting for us to focus on local currency,” Chumo said. “Forex will be the option that we will go for.”
Kenya Power will spend $700 million by 2017 building electricity substations and transmission lines as the government embarks on a plan to more than quadruple power output in that period. Power generation is set to increase by more than 5,000 megawatts in four years, compared with current capacity of about 1,700 megawatts.
Last week, ARM Cement Ltd., the country’s second-biggest cement producer, said it’s considering selling Eurobonds to fund its $300 million expansion program. Kenya’s government plans to offer as much as $2 billion of Eurobonds in January to finance infrastructure programs in Kenya.
Kenya Electricity Generating Co., the state-controlled power producer, plans to raise $1.65 billion by selling stock to existing shareholders, which will more than quadruple its number of shares in issue. The company needs financing to triple electricity output to 3,379 megawatts.
Kenya is East Africa’s biggest economy. The government is investing in infrastructure as it seeks to transform country into a middle-income nation by 2030.
Three quarters of the funding for Kenya Power’s future projects will come from outside the company, while the rest will be financed through revenue, Chumo said. The bulk of external funding will be provided by multilateral lenders such as the World Bank, he said.
Kenya Power’s capital expenditure in the 12 months through June was 40 billion shillings ($467 million), compared with 26 billion shillings a year earlier, it said Oct. 11.
During the period, borrowings increased to 39.9 billion shillings from 21.5 billion shillings a year earlier, according to the company’s annual report. New borrowings include loans from the International Finance Corp., the local unit of Citigroup Inc., Equity Bank Ltd., Standard Chartered Bank of Kenya Ltd. and FirstRand Ltd.
Shares in Kenya Power gained 0.7 percent to 14.90 shillings by the 3 p.m. close in Nairobi, the highest since Sept. 16 and paring their decline to 13 percent this year. Kenya’s FTSE NSE 25-Share Index has advanced 37 percent in 2013.
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