Sh12bn Thika power plant to be completed by December

• The Thika Power plant is a subsidiary of Lebanese firm Melec PowerGen, which was among four companies approved by the government in a move meant to involve the private sector in energy generation.

• Other power producers expected to benefit from this partial risk guarantee arrangement include Triumph Generating Company, Gulf Power, and Or Power.

• The four IPPS will add 285MW of electricity to the national grid. This is about a third of the current installed capacity.

A Sh12 billion Thika-based power plant will be completed by December, following approval of loan guarantees by the World Bank on Tuesday.

Energy PS Patrick Nyoike said the plant, which is expected to add 87MW to the national grid, will be ready before year-end.

“We expect the project to be completed either in November or December, but certainly before the end of this year,” said Mr Nyoike.

The World Bank yesterday approved a Partial Risk Guarantee (PRG) worth Sh3.74 billion to guarantee the letters of credit from Citibank London for the construction of the plant.

“The PRG for the $35 million and 7.7 million Euros will backstop two letters of credit provided by Citibank London,” said World Bank country director Johannes Zutt during a signing ceremony in Nairobi on Tuesday.

The Thika Power plant is a subsidiary of Lebanese firm Melec PowerGen, which was among four companies approved by the government in a move meant to involve the private sector in energy generation.

Expensive power

The plant, which will use heavy fuel oil, will however expose the country to a fresh supply of expensive power.

The arrangement with the World Bank had been reached after some Independent Power Producers (IPPs) complained last year that the government was taking too long to issue sovereign guarantees.

“This kind of arrangement is expected to make private power producers confident to invest in Kenya,” said Ministry of Finance PS Joseph Kinyua.

A deal was consequently reached between the government and the World Bank early this year where the bank would provide partial risk guarantees for private investors through its risk-guarantee arm called the Multilateral Investment Guarantee Agency (Miga).

Other power producers expected to benefit from this partial risk guarantee arrangement include Triumph Generating Company, Gulf Power, and Or Power.

The four IPPS will add 285MW of electricity to the national grid. This is about a third of the current installed capacity.

Triumph Power will produce 82MW, Gulf Power 80.3MW, and Orpower 52MW.

The PRGs will enable Kenya Power to mobilise long-term commercial financing to purchase electricity from private investors and boost power supply.