Kenya Power, the electricity distribution monopoly, has inked a deal with four auto dealers to supply a fleet of vehicles at Sh379 million. The partly State-owned firm, which is eyeing an improvement of its financial position revealed the cost in a tender notice.
Kenya Power acting Chief Executive Jared Othieno did not respond to queries on whether the vehicles deal was a purchase or a leasing plan.
It was also not immediately clear how many vehicles will be provided under the deal and whether they will be used by staff or set aside for electricity connection. Some departments like the police have turned to vehicle leasing in what has become a boon for leasing firms, financiers and auto dealers.
In the Kenya Power deal, Toyota Kenya will supply vehicles for Sh241.54 million while Simba Corporation has signed for Sh34.4 million worth of cars.
Simba Caetano Formula will provide vehicles worth Sh52.66 million while Isuzu East Africa will provide vehicles worth Sh51.26 million. Kenya Power says it approved the deal in July.
The listed firm has been left in a financial tight spot after it breached the terms attached to Sh59.6 billion worth of its loans.
Consequently, it has been seeking to secure fresh short-term loans to refinance similar debts on a longer tenor.
Early this year, mega electricity generation projects valued at billions of shillings were left in limbo after Kenya Power froze the signing of new power purchase agreements (PPAs) indefinitely, citing financial constraints and excess capacity.
The firm posted a 63.7% decline in net profit to Sh1.92 billion in the year ended June 2018 on higher costs.
Despite revenue rising by 4.23% to Sh125.8 billion on increased customer base, increased power purchase and higher finance costs depressed its bottom-line. Power purchase costs, excluding fuel and foreign exchange, increased by Sh2.59 billion to Sh52.79 billion in the period.
Kenya Power said last November that it had opened talks with its creditors to extend the payment period for segments of its loan obligations maturing in the current financial year.
“We are beginning to renegotiate part of the loans and convert them into long-term debt to bridge the negative liquidity gap,” acting chief executive Jared Othieno said.