Kenya Power must focus on systems improvement: analyst

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Kenya Power needs to shift its focus to upgrading its systems following the
appointment of a new chief executive officer said Afrika Investment Bank Capital Limited investment analyst Ted Macharia.

“Capital raising alternatives are immense for them right now. The CEO is stepping
out for someone else and that will perhaps dictate the beat that they will play to in the next half of the year.”

Kenya Power appointed Ben Chumo as acting CEO last week but he officially began his duties on Monday. The electricity company made headlines towards the end of May when a grid failure caused a nationwide blackout.

“They tried increasing electricity tariffs but the government declined their request so at the end of the day, what they can hope to do is to reduce electrical losses on their grid. And that is perhaps a challenge for the new management,” said Macharia.

He explained that the difference between Kenya Power and fellow power competitor
Kenya Electricity Generating Company (KenGen) has to do with contrasting growth strategies.

“As it stands KenGen is pursuing a very aggressive growth strategy. Kenya Power on the other hand is working on extremely high operational losses. Kenya Power has external contractors to put up the poles and that has an effect on the quality whereas KenGen is trying to improve, particularly, geothermal production of power,” explained Macharia.

Kenyan equities have been targeted by foreign investors who are keen on Africa funds or frontier market funds and KenGen looks to be a promising prospect.

“Investors will base most of their trading on the growth prospects. Kenya Power is struggling, KenGen is easily accommodating new capital so it is bound to produce better results compared to Kenya Power,” said Macharia.