AfDB loans Kenya Sh15 billion for power generation

Kenya has received Sh15.6 billion from the African Development Bank (AfDB) to boost power generation.

State owned Geothermal Development Company (GDC) has received concessionary loans amounting to Sh12.5 billion to tap 400 megawatts of geothermal at Menengai. The rest of the money will go to Thika Power for the development of 87 megawatts of thermal power.

The loan has been approved under two financing vehicles — $124 million from the African Development Fund (ADF), and $25 million from the Climate Investment Fund which is implemented by AfDB.

‘This is the first ever project under the Climate Investment Fund dedicated to an African low income country to be approved by a multilateral development bank,” said AfDB’s director for energy, environment, and climate change Hela Cheikhrouhou.

The Menengai fields have a potential of up to 1,600mw. The loan will help develop generation capacity of up to 400 megawatts in the first phase. This will represent a fifth of planned geothermal power generation by 2016.

The larger project, projected to cost $867 million, is co-financed by the Government in conjunction with a group of lenders. The project will generate a substantial increase in the provision of reliable, clean, and affordable energy equivalent to the current consumption needs of half a million Kenyan homes and 300,000 small businesses.

The project will also curb production of two million tonnes of CO2 per annum.

The power plant’s steam turbines will increase efficiency of the plant, thus reducing carbon emission. It will also ease the burden on Nairobi area’s grid, which suffers from frequent blackouts.

Thika Power spokesman Samer Nasr said the capacity can be dispatched on demand at a short notice, acting as a rapid response reserve for renewable sources.

Kenya Power said last week that three new diesel power plants — Gulf Power, Triumph Energy, and Thika Power — with a combined capacity of 252 megwatts were expected to reach financial closure by end of February.

“The power plants are currently a subject of discussions with the World Bank for provision of partial risk guarantees,” said Kenya Power MD Joseph Njoroge, adding that a financing plan could be ready by February.

Some 30mw of emergency power has been deployed in western Kenya near Muhoroni while KenGen has installed two gas turbines in Embakasi, Nairobi, bringing to 90mw the new capacity added to the national grid.

zsambu@ke.nationmedia.com