* Govt mediations start to ward off strike due on Monday
* Energy official says confident strike will not happen
* Power firm says will keep lights on despite strike
NAIROBI, Sept 17 (Reuters) - Last ditch talks to avert a strike by workers at Kenya's sole power supplier kicked off on Friday after the government stepped in to diffuse a standoff that could damage east Africa's biggest economy with blackouts.
The 8,000 unionised workers at the Kenya Power and Lighting Company (KPLC) are due to start their strike on Monday. They are angry that more than two-thirds of their members are on casual terms and the firm has been using contractors for some tasks, a practice the union wants stopped.
Since issuing a strike threat earlier this week, shares in the power company have declined on the Nairobi Stock Exchange, but recovered on Friday on hopes the company would restructure its balance sheet and make a rights issue soon.
Kenya's Labour Ministry is brokering the talks between the workers union, KETAWU, and the KPLC management, and has termed the strike illegal, but the union says the industrial action is protected under Kenya's new constitution.
The power company has said it had put in place contingency plans to ensure disruptions to electricity supply do not occur during the strike.
Energy Ministry Permanent Secretary Patrick Nyoike -- the top civil service official in the department -- told Reuters he was confident the Labour Ministry would end the stalemate.
"I'm confident there will be no strike. Everything will be solved through negotiations. I've been in touch with the KPLC managing director and Labour Ministry officials," he said.
At 1300 GMT, KPLC's shares rose 1.72 percent from the previous close to 240 shillings ($2.98).
The strike threat had dented the shares, which had rallied prior to the strike notice in anticipation of profit growth.
KPLC is due to issue its results soon for the full year which ended in June.
Ernest Nadome, the general secretary of Kenya Electrical Trade and Allied Workers Union, told Reuters the talks were on.
"We are meeting... to resolve the issue. We have been summoned, myself and the KPLC MD (managing director)," he said.
Nadome said on Thursday talks between the union and the power company had failed, and the union members were set for the strike if the thorny issues were unresolved. (Reporting by James Macharia and George Obulutsa; Editing by David Clarke)