Kenya Power unveils Sh16bn plan to boost electricity supply
Posted Wednesday, August 8 2012 at 18:40
Kenya Power has unveiled a Sh16.4 billion ($195.3 million) plan to reinforce its electricity network in the Nairobi metropolis to reduce power outages and lower technical losses.
The power vendor plans to build about 10 new substations and more than 400km of distribution and alternative supply lines to enhance stable and reliable supply in Nairobi, which accounts for 53 per cent of total power consumption.
The International Finance Corporation (IFC), which will fund the whole project, on Wednesday advanced the power firm a Sh4.2 billion loan to undertake the first phase of the project.
This will also include automation of the metro grid and installing a smart automatic changeover to facilitate transfer of consumers to backup supply lines.
“The projects will help improve quality of power supply and stabilise voltage to cope with additional demand,” said Kenya Power MD Joseph Njoroge at a media briefing after signing the loan agreement.
“This will bring the much needed relief to customers such as reduction of outages and also lowering of technical losses,” he said.
The credit line is the first tranche of a Sh16.8 billion loan the World Bank’s private sector lending arm will advance to Kenya Power to upgrade its system to boost electricity access from the current 2.1 million to three million households by 2015.
“More stable power supply will allow business growth and improve living standards in Kenya,” said Jean Philippe Prosper, IFC director for East and Southern Africa.
Data from the public utility firm shows that consumption from Nairobi which includes Limuru, Machakos, Mavoko, Thika and Kajiado grew by eight per cent to 3,268 gigawatt-hours in the year ending June last year.
The power distributor says that successful completion of the projects, with an average internal rate of return of about 25 per cent, will translate to financial savings worth billions of shillings.
The dollar-denominated loan will be repaid in a period of 12 years and attract an interest rate of less than five per cent.
READ: Opinion; Energy security is key to growth