Kenya Electricity Generating Company (KenGen) PLC is staring at losses of more than Sh250 million following acquisition of part of prime property in Mombasa for construction of a major road.
The property, including two residential flats with annual net rental income of Sh768,000, was hived off for dualling of the Mombasa-Mariakani highway, a major road connecting to the port of Mombasa.
KenGen, 70 percent owned by State, says Kenya National Highways Authority and National Land Commission have ignored requests for Sh250.61 million compensation for land acquired and destruction of part of the residential property at Changamwe.
“The construction of the road rendered the staff houses in Changamwe temporarily unusable since they were disconnected from the sewer line. The security wall was also damaged,” Auditor-General Nancy Gathungu disclosed in the latest report for the financial year ended June 2024.
“However, there was no response to correspondence seeking compensation amounting to Sh250,611,659 from the National Land Commission and KeNHA.”
The dualling of 41.7 kilometre Mombasa–Mariakani Highway has faced a raft of challenges since the project was launched, including legal suits by residents who were uprooted.
Kenya in 2020 signed a Sh10.4 billion deal with African Development Bank to partly fund the expansion of the road into a dual carriageway.
The project, whose implementation is ongoing, is part of the measures the government is undertaking to ease flow of traffic from the Mombasa port.
An estimated 4,000 trucks use the road daily to transport goods from the port into hinterland, including transit cargo to land-locked countries such as Uganda, occasionally causing traffic snarl-ups.
The compensation stand-off came in the year KenGen posted a net income of Sh6.79 billion, marking a growth of 35.5 percent from Sh5.01 billion a year earlier.
The firm’s earnings were largely boosted by the strengthening of the shilling which reduced the burden of its debt denominated in hard currencies, with the positive movements captured as finance income.
KenGen, whose shares are publicly-traded on the Nairobi Securities Exchange, reported net revenue rose to Sh48.2 billion from Sh45.8 billion, adding that hydro and geothermal plants helped it to capitalise on growing energy demand.
The performance prompted the electricity producer to propose a total dividend of Sh4.28 billion, more than double the total payout of Sh1.97 billion or Sh0.3 per share it distributed to shareholders last year.
