Kenya Power borrows Sh940 million from UBA

Corporate News

UBA branch in Community Area, Nairobi. PHOTO | FILE 

By SIMON CIURI

In Summary

• Kenya Power will use the funds to upgrade its power infrastructure in readiness to distribute the planned additional 5,000 megawatts (MW) expected to be generated by 2017.
• This is the first time UBA, whose parent firm is based in Nigeria, has loaned nearly Sh1 billion to a parastatal in Kenya.

United Bank of Africa (UBA), has given Kenya Power $10 million (Sh940 million), marking one of its largest deals in the lucrative corporate lending market.

Kenya Power said the borrowing is part of a syndicated loan it took from multiple lenders in January. The total borrowing could not be established by the time of going to press.

The company will use the funds to upgrade its power infrastructure in readiness to distribute the planned additional 5,000 megawatts (MW) expected to be generated by 2017.

This is the first time UBA, whose parent firm is based in Nigeria, has loaned nearly Sh1 billion to a parastatal in Kenya.

“We remain committed to a continued relationship with Kenya Power and other key players in the public sector to take on similar or larger projects especially in energy and infrastructure sector,” Isaac Mwige, the chief executive of UBA Kenya said in a statement.

The bank has for the past five years been recording losses since its entry into the Kenyan market, in what is seen as difficulty in wresting market share from established players including homegrown and foreign lenders.

UBA had a turnaround in the first quarter with net profit of Sh2.9 million. This reversed the Sh50.9 million net loss it made in the same quarter last year.

READ: Kenya Power plans 98 new sub stations to curb outages

The bank’s loan book increased 92.8 per cent in the period to Sh1.5 billion compared to Sh805 million a year earlier.

UBA, which has a presence in 19 African countries and operates branches in New York, France and London, recently hired its first Kenyan chief executive officer.

Kenya Power said it will also use the funds to replace its old lines with higher transmission capacity ones. It will also use the cash to upgrade its existing substations, build 37 new ones and install new equipment on the power grid.

“Timely completion of these capital intensive projects is critical in ensuring long term viability of Kenya Power business as well as in making the country an attractive investment destination,” said Ben Chumo, the Kenya Power managing director.

Kenya Power is seeking to improve its power supply, reduce breakdowns of its ageing infrastructure which has contributed to frequent power outages, especially during heavy rains