How will the changes at KPLC affect the share price?
The REPORT ON OWNERSHIP AND STATUS OF THE KENYA POWER AND LIGHTING COMPANY LTD (KPLC)has the following recommendations
7. CONCLUSIONS AND RECOMMENDATIONS
79. On Wednesday 14th April, 2010, while answering a Question by Private Notice by Hon.
B. Washiali, the Assistant Minister for Energy, Hon. M.M. Mohamud was not clear on whether KPLC is a parastatal or not. At one point he informed the House that KPLC was a private company with the Government as one of the shareholders.
At another point, he informed the House that ‘…KPLC is a Government parastatal, but a different
parastatal from other parastatals. It is in a different category with other parastatals. There
are parastatals which are not listed at the NSE. So this is different to that extent.’
The Government needs to be clear on whether KPLC is a Government Parastatal or a private company.
80. The Committee notes the importance of KPLC to service delivery in the country and that the achievement of Vision 2030 depends on the success of the electricity sector. It is evident that the Government largely supports KPLC through guaranteed loans and profit plough-backs and also appoints a majority of directors to the company’s Board of Directors.
Further, the Company’s vehicles have blue registration number plates, a
preserve of parastatals contributing to the uncertainty as to whether KPLC is a parastatal or a private company. Due to the importance of the electricity sector in the country and the regular support offered to KPLC, the Government should not allow KPLC to be in the control of business people who are motivated by profits at the
expense of the citizens.
81. KPLC could be termed a State Corporation if it was ‘wholly owned or controlled by the
government or by a state corporation’ in accordance with the definition proffered in the
State Corporations Act.
Following the disposal of shares by NSSF, the Company does not meet the requirements stipulated for it to qualify as a state corporation.
Furthermore, KPLC has not submitted fully to the provisions of the Public Audit Act, by having its
accounts audited by the Controller and Auditor General and submitted to the National Assembly for examination by the Public Investments Committee (PIC).
82. The Controller and Auditor General last submitted audited accounts for KPLC for the
year 2001/2002. PIC queried the non submission of KPLC accounts for the subsequent years in its 12th Report of 2004.
Thereafter, accounts for the financial year 2007/2008 were tabled in December 2009. That notwithstanding, in 2004 PIC examined the
following non accounting issues:-
i) KPLC’s pension’s scheme,
ii) Contracts between KPLC and IPPs,
iii) The general financial status of the company and
iv) Supply of treated poles during the Financial year 2004/2005 (13th Report).
83. The Committee therefore recommends that:-
i) The Government proceeds with the conversion of some of its 7.85% redeemable non-cumulative preference shares (87.12 million shares which Treasury has approved) into ordinary shares at a ratio of 1:1 and retains the ordinary shares so as to raise its stake in KPLC to 75% thus qualifying the company as a parastatal.
Go overdrive in purchasing the goods when there's blood on the streets, expecially if the blood is your own