Does KPLC have competition?

The only way back to profitability for this "rotten bluechip" is pre-paid meters. In my locality huku rural, Kenya power has not read meters since March 2020. They are hemorrhaging money everywhere. When is the last time you saw Kenya power staff disconnecting defaulting customers? Most wananchi are using stima nywee without paying a dime some for even 7 months and over. During Kibaki days, i recall branch managers supervising meter reading and disconnections personally. Siku hizi za Jubilee ni kukula nyama na phombe tu for branch managers waiting to be bribed by defaulting customers.

Buy Umeme, a lean and well managed company that pays dividend(>10%).


This one(Kenya power) is headed the KQ bailout route. Run for your life.

Umeme is a concessionaire of UEDCL (Uganda Electricity Distribution Company Ltd) assets. The current contract is set to expire in 2025 (2005-2025). They are currently in talks for another contract of 20 years which will allow them to borrow more money for expansion. In the past H.E and parliament have threatened to terminate the contract due to poor service delivery. NSSF ug is the largest institutional investor (23.2% )so this might work in their favour during contract negotiations.

Just like KP they suffer from power theft and prepaid meters have not solved this.

You are right, the "mali ya umma" attitude has encouraged cartels in all departments from meter reading, procurement (faulty transformers), hr etc to continue looting with impunity. The company has a power distribution monopoly but still loses a lot of money. KP is hostage to cartels within and outside the organisation. Until these are gone the company will continue being in the red and might just collapse under the mountain of debts it has accumulated.

No, it's not doom. Obiero being my role model, I'm hoping to buy more KPLC shares in the next three months anticipatinng to have 100% return.

Watch and learn

KP is assured of revenues no matter what, since it is the only power distributor. However they have massive debts that GoK has idemnified. GoK can't let them go under.

Kengen has agreements with KP which mandate it to take the power generated at agreed rates, incase KP can't pay i'm sure GoK will intervene.


Link

The biggest threat is dilution. A very likely scenario is where the GOK guaranteed debt cannot be repaid then GOK converts all the debt owed to it into equity. Right now there are about 1.95 billion shares of KPLC. KPLC has about 100 billion worth of debt. Suppose half that debt was converted into shares at the current price of 2 shillings a share. There would now be 27 billion shares with GOK owning about 26 billion of them. The share previously valued at 2 shillings would now be worth less than 20 cents.

Rights issue like the one Kengen issued a few years ago can also greatly dilute the stock and lower the share price.

Kenya is set to declare wholesale power supply contracts null and void following a drop in demand in the wake of the global Covid-19 pandemic, setting the stage for a crisis in the electricity market that could hurt supply.

The Ministry of Energy says that it will declare force majeure on power generation contracts, which technically means that Kenya will not be bound by the existing pacts on payment of electricity from the more than 10 power producers.

Ministry moves to declare wholesale power deals null https://www.businessdail...1734-ifpgvuz/index.html via @BD_Africa

Covid19 has been with us for 3 months months only but is being blamed for losses that started 3 years ago.

Salaries are paid on 26th. For the first time ever, there has been a delay of 3 days and counting. This may sound benign but it is literally unprecedented. Secondly, I have heard of "restructuring" - wait for the inevitable job cuts news.