KenGen will not pay its shareholders a dividend for the first time since the company went public in 2006.
This comes after its net profit for the year to June dropped 41 per cent to Sh. 6.7 billion. KenGen, which paid its shareholders a dividend of 65 cents per share in 2015 and 40 cents apiece the previous year, is implementing several power projects that it says will inject an additional 706 megawatts (MW) into the grid by 2020.
“To sustain our current growth direction, and in line with our strategy, we continue with our investment plan to drive geothermal and wind generation capacity growth. In view of the pipeline of projects enumerated above, the board of directors does not recommend payment of dividends for the year,” KenGen said in a statement.
The decline in net profit was attributed to the absence of a tax credit the company enjoyed a year ago.
However, in its rights issue prospectus released in May, the power firm promised its shareholders a tidy dividend return. “The company targets a dividend payout ratio of up to one third (33 per cent) of the company’s profit before tax or up to 50 per cent of the company’s profits after tax,” the power firm promised investors.
Kengen owns more than 30 power generating plants.