Circle Gas, whose subsidiary M-Gas provides prepaid LPG gas service, says it is in advanced talks with a sovereign clean cooking initiative and a global bank to raise Sh2.6 billion to fund investments in smart meters to drive growth.
The company estimates it will require Sh7.4 billion to finance operations and meet liabilities as they fall due in the period ending 30th June 2026. Circle Gas expects that the Sh7.4 billion cash outflow will be covered by the anticipated Sh2.6billion external funding and other sources of working capital.
The company said in its latest annual report:
“The base case scenario assumes that the Group will be successful in raising additional third party funding of US$20.0m to fund further growth in the period ending 30 June 2026 with no growth until external funding is available in the second half of 2025. Net cash outflows of US$56.7m will be funded partly by the anticipated US$20.0. new external funding and by the other sources of working capital finance referred to below.”
Circle Gas, which has operations in Kenya, Tanzania and Zanzibar, says that if the external funding is not secured, the company will maintain zero-growth strategy for 2025 and quarter one 2026. The company projects that in this zero-growth scenario, cash outflows will reduce to around Sh4.4 billion which will be funded by other sources of working capital as follows:
- The Group has a carbon credit purchase deal worth Sh3.5 billion, of which Sh1.1 billion has already been paid.
- The Group’s Kenyan bank, I&M Bank, has provided new facilities to a combined value of Sh741 million and agreed in principle to restructure existing loans.
- The Group is owed around Sh1.1 billion by Kenya Revenue Authority relating to Pre-July 2023 VAT and is confident of having this refunded.
- The Group is actively negotiating to upgrade its carbon credits into the Paris Agreement "Letter of Authorization" (LoA), category. Carbon credit sales under the conditions of an LoA are currently at a significantly higher value than voluntary carbon credit sales, with the potential to raise additional funding of up to at least Sh1.17 billion based on the number of accredited carbon credits held by the Group.
The company reported revenues of $36.1m (Sh4.6 billion) for the year ended 31st December 2024, a 20 per cent growth compared to $30.2m (Sh4.7 billion) it reported a year earlier. Despite the revenue growth, Circle Gas’ losses widened by 5 per cent to $40.2m (Sh5.2 billion), from $38.2m (Sh5.9 billion) in 2023.
