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Kengen has bolted!
the deal
#181 Posted : Saturday, February 23, 2013 3:06:18 PM
Rank: Elder


Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Well the good thing with Wazua is this thread will still be here 4-5 years down the line smile
Bettertry
#182 Posted : Saturday, February 23, 2013 5:24:46 PM
Rank: Member


Joined: 9/19/2010
Posts: 237
Location: Republic of Graham & Doddsville
@Aguytrying, no doubt... geothermal will b a major driver in as far as earnings growth is concerned but... it'll not b the only driver (important 2 note). As a result of a rising power demand outstripping the supply then I think we can agree that Kengen will continue to rely on other forms of power generation.
Hence, the qns y overlook the earnings growth that'll come from the completed & yet 2 b completed upgrading of existing facilities, coz in the overall picture I think they'll count for something???
We Will Either Find a Way or Create One - HANNIBAL
Cde Monomotapa
#183 Posted : Saturday, February 23, 2013 6:44:41 PM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
Kenya: Kenya-Ethiopia Power Project Bids Finalised http://m.allafrica.com/stories/201302221444.html/
guru267
#184 Posted : Saturday, February 23, 2013 7:29:24 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
If they issue this 30billion bond finance costs will shoot up by 3billion per annum! That is unless they will only start paying when the plant is completed...

Such an increase will surely send them into losses in the short term Sad
Mark 12:29
Deuteronomy 4:16
VituVingiSana
#185 Posted : Saturday, February 23, 2013 11:58:53 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,134
Location: Nairobi
@thedeal You need to read what @kausha is saying. Let's see you back up your words with facts. Yes, there is unfulfilled demand for power. Yes, it will continue growing. The question is one of PRICE. If electricity is 'too expensive' then consumption will stall.

The cost of geothermal power is not in the operating costs but the capex required. The capex is NOT free. The cost of debt may be very high & passed on to consumers. When KPLC cannot 'draw' on the capacity of many IPP projects, it still pays a capacity charge. This eventually trickles down to the consumer.

I disagree with @kausha that 'local oil' will be substantially cheap(er) since oil is a traded commodity & it is an economic travesty to sell Kenya's oil 'cheap' for producing thermal power. That said, we need to move away from oil (thermal) power. Perhaps, we can burn coal but that is dirty.

We have reached the max with large hydropwer projects since the rivers we have are quite small. At best some small hydro projects or better & more efficient designs for existing facilities.

@Kausha is talking numbers. Forget 'speculation' & concentrate on what is viable. Kenya does import a little (not much) electricity from Uganda. It even exports a little to Uganda when they need it. The Ugandans can export more once Bujagali reaches peak efficiency & (I think) Karuma is up & running.

Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
VituVingiSana
#186 Posted : Sunday, February 24, 2013 12:06:08 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,134
Location: Nairobi
The cost of debt [if you consider the Infrastructure Bond & PIBO is tax-free] is 12.5% for KenGen. The government is giving up a substantial chunk of its revenue. If we were to normalize the interest it would be approximately 16% which is pricey debt.

Assume KenGen pays 12.5% [what it pays for the PIBO] for the new debt then:
30bn x 12.5% = 3.75bn per year but it may recover some of it by placing the funds (until they are utilized) with GoK or banks. Nevertheless, there is a net cost. It will take 3-5 years for the 'assets' to start producing electricity & revenue (cash inflows) which means profits will be depressed until 2016 at the earliest.

At the right price, KenGen (like any other firm) looks good. The right price is not 12 but sub-10 with a holding period of 4-7 years before 'decent gains' can be harvested.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
the deal
#187 Posted : Sunday, February 24, 2013 7:26:42 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
@VVS @Guru KenGen raises KES30Bn at 12% they can easily place it at any local bank at 10-13% p.a...as they wait for the funds to be utilised...they won't use all the funds in 1 year...LMAO...look at the cost of funds in the market...1 year T-Bill is currently above 11.6% so at the end of the day the net effect on profits is zero...so KenGen profits continue to roar...KenGen also talked of doing the bonds overseas...you know the yields there 0-7%...plus the ABB's will not be part of KenGen's B/S so KenGen's profits and financial healthy are intact thats the beauty of securitization...this thing is a RED HOT BUY...Genghis Capital can confirm.
murchr
#188 Posted : Sunday, February 24, 2013 7:36:17 AM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
A quick one...when is the menengai power getting into the market?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
VituVingiSana
#189 Posted : Sunday, February 24, 2013 6:04:17 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,134
Location: Nairobi
@thedeal - Which commercial loan [even if foreign] is at 0% without strings like buying overpriced goods/services?
You said "KenGen also talked of doing the bonds overseas...you know the yields there 0-7%"
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
sparkly
#190 Posted : Monday, February 25, 2013 7:18:24 AM
Rank: Elder


Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
The DY and P/B tell me that this is a good stock to have. Too much info will lead to analysis paralysis.
Life is short. Live passionately.
gatoho
#191 Posted : Monday, February 25, 2013 8:14:03 AM
Rank: Member


Joined: 1/1/2010
Posts: 511
Location: kandara, Murang'a
sparkly wrote:
The DY and P/B tell me that this is a good stock to bave. Too much info will lead to analysis paralysis.

Foresight..
the deal
#192 Posted : Monday, February 25, 2013 8:32:28 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Kenya Power to use cash raised from proposed tariffs to build new plants

http://www.nation.co.ke/...4/-/kulu35z/-/index.html
MoneyMonger
#193 Posted : Monday, February 25, 2013 10:21:16 AM
Rank: Member


Joined: 4/25/2012
Posts: 110
[quote=the deal]Kenya Power to use cash raised from proposed tariffs to build new plants

http://www.nation.co.ke/.../-/kulu35z/-/index.html[/quote]

I am lost here. Is this a way of forcing consumers (rather than share holders) to fund their power generation projects? Is that fair really?! can Kenya power produce sustainably cheaper power compared to KenGen which does it on a larger scale? I need to answer/research these questions.

d'oh!
There is nothing as dangerous as an Idea, when there is only one Idea
VituVingiSana
#194 Posted : Monday, February 25, 2013 11:09:34 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,134
Location: Nairobi
MoneyMonger wrote:
[quote=the deal]Kenya Power to use cash raised from proposed tariffs to build new plants

http://www.nation.co.ke/.../-/kulu35z/-/index.html[/quote]

I am lost here. Is this a way of forcing consumers (rather than share holders) to fund their power generation projects? Is that fair really?! can Kenya power produce sustainably cheaper power compared to KenGen which does it on a larger scale? I need to answer/research these questions.

d'oh!
Coz it is a regulated utility. Shareholders have suffered by not being allowed to recover a fair return on their investment. The ROE is very low. The tariff increase was NOT allowed even though the Rights Issue memorandum had it as a Selling Point.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
ChessMaster
#195 Posted : Monday, February 25, 2013 11:43:02 AM
Rank: Elder


Joined: 2/23/2009
Posts: 1,626
Can't remember who said it but they are right.Kengen just might reach 9
Uncertainty is certain.Let go
Kausha
#196 Posted : Monday, February 25, 2013 12:40:34 PM
Rank: Member


Joined: 2/8/2007
Posts: 808
I am just wondering, If power being generated is less than what KPLC requires, it follows that there is already a market for the power at current prices. I believe current prices already provide an adequate return for shareholders. @VVS the ROE is low because KPLC converted prefs to equity and this prefs relate to a dud debt owed to Kengen at separation and is of now real value to shareholders really. Ignoring ROE, KPLC is already making enough profits so current prices are fair to consumers and shareholders.

I am certain beyond reasonable doubt that KPLC is raising tariffs to fund regeneration of the national grid. KETRACO will only do new high voltage transmission lines. As a consumer, I am horribly pissed off with this decision. It's the MOST stupid decision a government can make at this time and time will tell. We have barely repaired the economy and we want to play around with inflation again. CBK is barely able to control real interest rates and you know our businessmen you raise power everything goes up immediately, heck even your matatu owner is tempted to jump into price increase party.

I just think government should have found a cleverer way of funding this regeneration and spared consumers of tariff hikes. Expect inflation to continue rising and rates to remain higher and the economy to be remained in the woods!

As an investor, I don't mind consumers covering the debt service early but in the long term I worry because high power costs are destructive to the economy and may result in nominal growth at best, so long term for me this is sell but in the meantime a nice trading stock!
murchr
#197 Posted : Monday, February 25, 2013 4:05:04 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
ChessMaster wrote:
Can't remember who said it but they are right.Kengen just might reach 9


Am waiting smile
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
ChessMaster
#198 Posted : Monday, February 25, 2013 4:07:20 PM
Rank: Elder


Joined: 2/23/2009
Posts: 1,626
murchr wrote:
ChessMaster wrote:
Can't remember who said it but they are right.Kengen just might reach 9


Am waiting smile


Me tooPray
Uncertainty is certain.Let go
sparkly
#199 Posted : Monday, February 25, 2013 5:14:30 PM
Rank: Elder


Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
VituVingiSana wrote:
MoneyMonger wrote:
[quote=the deal]Kenya Power to use cash raised from proposed tariffs to build new plants

http://www.nation.co.ke/.../-/kulu35z/-/index.html[/quote]

I am lost here. Is this a way of forcing consumers (rather than share holders) to fund their power generation projects? Is that fair really?! can Kenya power produce sustainably cheaper power compared to KenGen which does it on a larger scale? I need to answer/research these questions.

d'oh!
Coz it is a regulated utility. Shareholders have suffered by not being allowed to recover a fair return on their investment. The ROE is very low. The tariff increase was NOT allowed even though the Rights Issue memorandum had it as a Selling Point.


Is it Kenya Power building new plants or Kengen? Surely these tariff costs are usually passed over to the power producers i.e. Kengen and the IPPs.
Life is short. Live passionately.
murchr
#200 Posted : Monday, February 25, 2013 6:06:22 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
sparkly wrote:
VituVingiSana wrote:
MoneyMonger wrote:
[quote=the deal]Kenya Power to use cash raised from proposed tariffs to build new plants

http://www.nation.co.ke/.../-/kulu35z/-/index.html[/quote]

I am lost here. Is this a way of forcing consumers (rather than share holders) to fund their power generation projects? Is that fair really?! can Kenya power produce sustainably cheaper power compared to KenGen which does it on a larger scale? I need to answer/research these questions.

d'oh!
Coz it is a regulated utility. Shareholders have suffered by not being allowed to recover a fair return on their investment. The ROE is very low. The tariff increase was NOT allowed even though the Rights Issue memorandum had it as a Selling Point.


Is it Kenya Power building new plants or Kengen? Surely these tariff costs are usually passed over to the power producers i.e. Kengen and the IPPs.


Kenya power is funding Kengen and Ketraco. Thats what I have been trying to say all this while. I believe Kengen wants to be paid more for elec.

A while back the water authorities started charging Kengen for the water they use, this too has been pushed to the consumer.
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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