Kengen is paying alot of debts and if it can afford paying dividend unlike kenya power,its a share worth keeping.the only fear for me can be gvt share dilution in future.

EPS without exceptional item? These tax credits must be resulting from Investment Allowance claims on new plant.

... tax credit resulted from capital allowances enjoyed by the company following the completion of Sang’oro and Kindaruma power plants,” said acting KenGen managing director Simon Ngure in a statement.

Sang’oro power added 21 megawatts of power to the national grid while Kindaruma injected 24 megawatts in the year under review.

These investments are what allowed KenGen to earn tax rebates in a scheme started to promote investments outside the city due its economic dominance at the expense of other regions.

http://www.businessdailyafrica....42/-/albjdq/-/index.html

The problem with subsidies or 'favored' sectors or tax schemes is highlighted by KenGen's Tax Credit on the Sangoro & Kindaruma plants. KenGen could not have located them in an urban area so there is no real benefit to the 'rural' area. Furthermore, the power plants had to be located in areas where the fuel [water/hydro] was available so even without the Tax Credits, KenGen would have still gone ahead as long as the economics made sense.

What Kenya should do is encourage rural development by investing in infrastructure like roads or access to electricity rather than provide subsidies or breaks to a part of the business community. Most of the power generated by Kindaruma will end up being used in urban centers [not many jobs created that would not have been created] yet the Tax Concession on Capex was meant to foster (re)locating businesses to Rural areas that would otherwise have been located in congested urban areas.

Anyway, that is on a macro level. As far as KenGen is concerned, take the Tax Concession coz it contributes a lot of one-time boost for the EPS ... and there are other capital projects coming up!

Post 273

Close call but management's reasons are different. Kengen should expand its market now KPLC is not selling as much as KENGEN would like. But Aggreko is no longer selling power to KPLC.

KenGen, with the tax credit, now trades at P/E of 7.1x and P/B of 0.2x with an ROE of 3.2% which compares unfavorably to Kenya Power’s P/E of 6.4x and P/B of 0.6x with an ROE of 9.2%

--Weak economic growth will lead to a slower growth in the consumption/electricity sales.Our per capita consumption of electricity is still low and the Kenyan economy is growing at below the average sub-saharan economic growth.
--Alot of marketing needs to be done to encourage to consume more power akin to the one been done by mobile phone companies encouraging subscribers to consume more internet bandwidth/bundles.
--280Mw of geothermal power is being brought online by September 2014 with the first 70mw coming on-board in December 2013.
The results are good and even with the debt kengen currently has (ksh.85b)it is still able to give dividends.A good stock to buy and hold

KenGen Plans to Raise $5.5 Billion to Fund Expansion

Kenya Electricity Generating Co., the East African nation’s biggest power producer, said it will raise $5.5 billion in debt and equity to more than double generating capacity over the next 40 months.

The company plans to generate 2,500 megawatts of additional capacity in that period, acting Chief Executive Officer Simon Ngure told reporters today in the capital, Nairobi. About 70 percent of the funds will come from development finance institutions, while the remainder will be sourced from equity including joint ventures, he said.

I totally agree with you, its time to start looking elsewhere for mkt, being dependent on KPLC will hurt KENGEN in the future...and, its time this company got new mgt

I had missed the all important $ sign. There goes the rights issue confirmation.