By taking over Kenya Power’s overdraft capabilities, NCBA Bank Kenya has become the largest local lender to the energy distributor, lending Sh6.75 billion.
On October 9, 2020, the Nairobi Securities Exchange-listed bank provided the 12-year loan. The loan’s terms are detailed in Kenya Power’s annual report for the fiscal year ending in June.
"Debt refinancing/restructuring has been listed as one of the current turnaround options. The refinancing procurement procedure is underway. During the current fiscal year, a total of Sh6.7 billion in overdraft was converted to a term loan," Kenya Power reports.
"As income collection has increased, the overdraft balance has gradually decreased." The company's reliance on overdrafts has also been decreased."
The NCBA loan is in local currency and has a nine per cent interest rate.
NCBA is also paid a loan origination fee, which is a percentage of the total loan value charged by banks for processing a loan application.
In the fiscal year ending June, Kenya Power was charged a total loan origination fee of Sh794.9 million by Rand Merchant Bank, NCBA, and Standard Chartered Plc.
According to Kenya Power, the NCBA loan has a 36-month repayment moratorium starting in September 2020.
Equity Bank, which is owed Sh4 billion, is another local lender that has lent to the electricity company.
Kenya Power has also taken out significant loans from development finance institutions and international banks. As the sum due to other commercial banks decreases, NCBA is the latest to release a loan to Kenya Power.
During the review period, the electricity distributor repaid loans totalling Sh20.2 billion, up from Sh12.4 billion the previous year.
The moves saw its finance costs drop to Sh9 billion from Sh12.4 billion.
Email: uzalendonews24@gmail.com to submit your story.
SUBSCRIBE TO OUR YOUTUBE CHANNEL
