Kenya Electricity Generating Company Limited An offer for sale by KenGen for a 10 year Public Infrastructure Bond Offer Minimum Application Amount is Kshs 100,000 INFORMATION MEMORANDUM • Financial Advisor – KPMG Kenya • Arranger, Fiscal Agent & Collecting Bank – Standard Chartered Bank • Sponsoring Broker & Lead Placing Agent – Standard Investment Bank Ltd • Legal Advisor – Hamilton Harrison & Mathews • Reporting Accountants – PricewaterhouseCoopers • Receiving Agent & Registrar – Image Registrars Ltd • Bond Trustee – Livingstone Registrars Ltd • Advertising Agency – Scanad Kenya • Public Relations Agency – Ogilvy PR KENYA ELECTRICITY GENERATING COMPANY LIMITED (“KenGen” or the “Issuer” or the “Company”) KenGen was incorporated on 1 February 1954 under the Companies Act (Chapter 486 of the Laws of Kenya) under registration number C.20/55 and listed on the Nairobi Stock Exchange on 17 May 2006 ................................................................................................................................................................................................................................................. INFORMATION MEMORANDUM ................................................................................................................................................................................................................................................. IN RESPECT OF AN OFFER OF FIXED RATE LONG TERM UNSECURED PUBLIC INFRASTRUCTURE BOND OF UP TO KENYA SHILLINGS 15 BILLION OR KENYA SHILLINGS 25 BILLION (INCLUDING GREENSHOE OPTION) DUE TO MATURE IN 2019 AT PAR AND LISTING OF THE BOND ON THE FIXED INCOME SECURITIES MARKET SEGMENT OF THE NAIROBI STOCK EXCHANGE and incorporating a Bond Application Form KenGen PUBLIC INFRASTRUCTURE BOND OFFER 2019 “KenGen INFRA BOND 2019” (NSE Code “KenGen/FXIB/2009/10 YR”) Proposed Listing 9 November 2009 Financial Advisor KPMG Kenya Arranger Standard Chartered Bank Kenya Limited Sponsoring Broker & Lead Placing Agent Standard Investment Bank Legal Advisor Hamilton Harrison & Mathews Reporting Accountants PricewaterhouseCoopers The date of this Information Memorandum is 28 th August 2009 This Offer opens on 8 September 2009 and closes on 29 September 2009 1 Mr. Joseph Kinyua Mr. Patrick Nyoike To the Kenyan & International Investor Community RE: KENYA ELECTRICITY GENERATING COMPANY LIMITED INFRANSTRUCTURE BOND (KenGen INFRA BOND 2019) The Government of Kenya supports and has granted the requisite approvals under the State Corporations Act for the proposed Infrastructure bond ( KenGen Infra-Bond 2019) that KenGen intends to issue in order to raise funds by way of a public Infrastructure Bond Offer denominated in Kenya Shillings to be issued in the Republic of Kenya. On behalf of the Government of the Republic of Kenya (‘GoK’), this is to confirm that: 1. As at the date of this letter, the GoK is the legal and beneficial shareholder of 70% of the issued shares in KenGen; 2. Consistent with the provisions of Section 43 of the Energy Act of 2006, GoK wishes to record that it is Government policy to ensure that KenGen operates in a cost effective manner and obtains sufficient revenue streams in order to maintain its financial integrity and to attract capital; 3. It is the Government’s Policy that all exchange differences associated with foreign currency loans taken by KenGen to finance its electricity generation projects are passed on to KPLC under the various Power Purchase Agreements, for onward recovery from consumers of electricity. As such, KenGen does not suffer any exchange losses on repayment of its foreign currency denominated debts. The Government notes and fully supports the electricity generation capacity expansion plan that KenGen is currently undertaking with a view to securing the country’s electricity needs at the least cost. Accordingly, the Government of Kenya wishes to reiterate its continued support to KenGen’s capacity expansion strategy and its active participation in meeting the electricity needs of the country. The Government further appreciates that the proposed Bond Issue will deepen the fixed income securities of the capital markets in Kenya. We welcome all interested investors to partner with the Government in the financing of our electricity generation capacity. Thank You. Joseph K. Kinyua, CBS Patrick M Nyoike, CBS Permanent Secretary Permanent Secretary Treasury Ministry of Energy 2 KENYA ELECTRICITY GENERATING COMPANY LIMITED (KenGen was incorporated on 1 February 1954 under the Companies Act Chapter 486 of the Laws of Kenya under Registration Number C.20/55 and listed on the Nairobi Stock Exchange on 17 May 2006) On 2nd November 2009 or such other date as Kenya Electricity Generating Company Limited ( “KenGen” , the “Company” , or the “Issuer” ), KPMG Kenya (the “Financial Advisor” ) and Standard Chartered Bank Kenya Limited (the “Arranger” ) may agree (the “Issue Date” ), the Issuer will, subject to compliance with all relevant laws and regulations, issue Kshs 15,000,000,000 12.5 % registered Fixed Rate Long Term Public Infrastructure Bonds due 2019 (the “Bonds” ) (subject to an option to increase the amount of such issue by up to Kshs 10,000,000,000 (the “Greenshoe” ) to a total aggregate principal amount of up to Kshs 25,000,000,000). The Bonds will bear interest at a rate of 12.5 % per annum payable semi-annually in arrear on each 30 April and 31 October, subject to the Business Day convention, up to, and including, the Maturity Date (each an “Interest Payment Date” ). Unless previously redeemed or cancelled in accordance with the Terms and Conditions, the Bonds will be redeemed at par on 31 October 2019 (the “Maturity Date” ). The Bonds are subject to redemption in whole or in part on any Interest Payment Date from and including the Interest Payment Date falling on or nearest to 30 April 2012 at their principal amount at the option of the Issuer (“Early Redemption”). Further, it is the intention of the Issuer to redeem the Bonds on an instalment basis in sixteen equal instalments on each Interest Payment Date from the Interest Payment Date falling on or nearest to 30 April 2012 up to, and including, the Maturity Date. In the event that the Nairobi Stock Exchange (“NSE”) and Central Depository & Settlement Corporation Limited ( “CDSC” ) will have operationalised the Central Depository System for bonds by the time the Bonds are listed, then the Bonds will be issued in immobilised form in Central Depository System Accounts ( “CDS” ) held at the CDSC and where applicable (i.e. at the option of an applicant) in certificate registered form, serially numbered and with interest coupon attached on issue, and will constitute registered debt obligations of the Issuer constituted by and owing under the Trust Deed. If the CDS system for Bonds will not be operational by the time the Bonds are listed, then all Applicants will receive the Bonds in certificated registered form as detailed above. The Bonds will be issued in denominations of Kshs 100,000 and integral multiples thereof. Certificates evidencing (but not representing) an individual Bondholder’s holding in the Bonds will be available upon request and will show the total amount of Bonds held by them. Such holding shall be expressed in denominations of Kshs 100,000 and integral multiples of Kshs 100,000 in excess thereof. The Bonds constitute direct, general, unsecured, unsubordinated and unconditional obligations of the Issuer and rank pari passu among themselves and at least pari passu with all other present and future unsecured obligations of the Issuer, except for such obligations as may be preferred by provisions of law that are both mandatory and of general application. The Bonds will be marketed as a public offer to the general public. The Issuer intends to list the Bonds on the Fixed Income Securities Market Segment (“FISMS”) of the (“NSE”) following issuance. The rights of the Bondholders are governed by the terms and conditions of the Bonds (the “Terms and Conditions” ) as contained in the Trust Deed dated on the date hereof (the “Trust Deed” ) between the Issuer and Livingstone Registrars Limited (the “Trustee” ). The sale of the Bonds by the Bondholders will be subject to the rules of the NSE, and the Terms and Conditions set out in this Information Memorandum. There are currently no other restrictions on the sale or transfer of Bonds under Kenyan law. Application for approval of the issue of the Bonds has been made to, [and granted by], the Capital Markets Authority ( “CMA” or “Authority” ) of the Republic of Kenya. As a matter of policy, the Authority does not assume responsibility for the correctness of statements or opinions made or reports contained in this Information Memorandum. The approval of the Bonds by the Capital Markets Authority is not taken as an indication of the merits of the Issuer or of any investment in the Bonds. Application has been made to, and granted by, the Nairobi Stock Exchange for the Bonds to be issued and to be officially listed in the FISMS . The NSE assumes no responsibility for the correctness of any of the statements made or opinions or reports expressed or referred to in this Information Memorandum. Admission to the Official List of the NSE should not be taken as an indication of the merits of the Issuer or any investment in the Bonds. The directors of the Issuer, whose names appear on page 6 of the Information Memorandum, accept responsibility for the information contained in this document. To the best of the knowledge and belief