Centum defends coal-fired plant as full year profit dips

Kenya’s Centum Investment Co PLC reported an 18 percent drop in full-year pretax profit on Tuesday and said it would press ahead with a 1,000 MW coal-fired power plant opposed by conservationists.

The firm, which invests in listed firms and private companies from drinks makers to property developers, put the profit decline down to lower income from asset sales in the year to the end of March than the previous 12-month period.

“What is encouraging for us is that the underlying portfolio companies, the growth companies, had a growth in profitability,” Centum Chief Executive James Mworia told Reuters.

Shares in the firm fell 2.5 percent to 39 shillings each after the results were released.

Centum said it made 1.03 billion shillings ($10 million) from the sale of investments, down 81 percent from 5.42 billion the previous year, when it made 3.2 billion alone from the sale of a 50 percent stake in a Kenyan shopping mall.

Mworia said the company would focus on developing the opportunities it had identified in various sectors such as farming and healthcare to boost returns in the future.

“We have taken time to develop opportunities in good sectors so we are not out hunting for new opportunities,” he said.

Centum, whose largest shareholder is Chris Kirubi, a Kenyan tycoon who made his fortune from property and hosts a music show on his radio station, has been diversifying into the energy sector to increase earnings.

But its 1,000 MW coal-fired plant project has attracted criticism from conservationists on the grounds it would pollute Lamu island, an ancient Swahili settlement on the coast that is a tourist destination and a U.N. World Heritage site.

The environmental groups have challenged the construction of the plant before a government tribunal.

Mworia dismissed the concerns, saying the power plant would use modern technology and lower the cost of electricity to help the country meet minimum grid demand.

“That criticism is based on a lack of knowledge of the technology that exists today in coal and also a lack of understanding of the needs of the sector,” he said.

Centum subsidiary Amu Power signed a financing agreement for the coal plant with an undisclosed Chinese investor last month. The amount of investment was also not disclosed.

Centum’s full-year pretax profit fell to 8.9 billion shillings and the board recommended a dividend of 1.20 shillings per share, up a fifth.

Net asset value per share, a key measure of performance for investment firms, rose to 67 shillings from 59 shillings in the prior year, Centum said.