MaichBlack wrote:sparkly wrote:MaichBlack wrote:MaichBlack wrote:sparkly wrote:FUNKY wrote:https://www.kbc.co.ke/kengen-to-set-up-an-energy-research-and-development-laboratory-in-tana/amp/?__twitter_impression=true
Some of these off-balance sheet investments like bottling drinking water, running industrial park, Transformer & Solar cell manufacturing are distracting and potentially money losing.
Kengen should just concentrate on power generation and ancillary services like research and engineering. Those other investments are Enron style diversions.
It normally works if semi autonomous offshoots are formed.
General Electric is a good example... General Electric is not a third world government owned utility company.
So what exactly is your issue? Diversification or the fact that Kengen is a third world government owned utility company???
Your argument is that diversification is good for Kengen. You give an example of GE where diversification has worked well.
My points are as follows:
1. Kengen has not exhausted its core function of investing in power generation. Some argue that Kenya is oversupplied with power. However neighbouring countries are not. As a shareholder, I will be happy if Kengen invests in a power plant in Somalia, Congo, South Sudan, Uganda etc
2. GE is a purely for profit first world conglomerate while Kengen is a third world majority government owned utility company. GE diversification projects are evaluated for ROI and optimal allocation of capital. Kengen projects on the other hand will end up as money draining white elephants. There will be no accountability by management. Peer for comparison for Kengen is Mumias not GE.
3. As a Kengen shareholder, the diversification projects don't inspire confidence. In my opinion, instead of allocating capital in tenderprising projects, they should invest in core power generation, pay down debt or just pay us dividends. That said, I am on the lookout to exit at an appropriate price.
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