China says ready to fund 5,000MW power generation

China is ready to use part of the $20 billion (Sh1.8 trillion) it pledged to Africa earlier this year to finance Kenya’s plan to generate 5000 megawatts of power.

China’s ambassador to Kenya Liu Guangyuan said financing could be structured to meet the infrastructure budget that Kenya needs.

At least Sh45 billion ($500 million) monthly will be required in the next 40 months to finance the generation of the ambitious 5,000 megawatts, amounting to a total of Sh1.5 trillion ($17.5 billion) by 2017.

Kenya recently signed a $5 billion (Sh425 billion) loan deal with China for roads, rail and environment.

The envoy was speaking last week during a meeting dubbed “Ready for Takeoff” where options for financing infrastructure in Kenya were explored.

About 150 participants at the meeting co-hosted by the government and the International Monetary Fund (IMF) concluded that there was adequate capital but its disbursement needed to be phased.

Ayisi Makatiani, the managing partner and CEO of Fanisi Capital Ltd, said provident funds such as the National Social Security Fund had the potential to finance infrastructure projects.

“The NSSF in Kenya, Uganda and in many other countries has the potential to provide a lot of funding for infrastructure but we have been quite weak in developing these pension funds to finance infrastructure,” he said.

Mr Makatiani, whose company recently bought an undisclosed stake in retail pharmacy chain Haltons Ltd for Sh262 million, said facilitation of housing development was lengthy and cumbersome.

Director of African Development Bank (AfDB) Regional Resource Centre in Nairobi Gabriel Negatu said the power generation plan should consider all forms of energy including coal which China exploited for its development.

“The plan to get 5,000MW is ambitious but doable. It can be a mix of various sources for this energy level to be attained,” said Mr Negatu, projecting that Kenya could export energy in five to seven years.

Infrastructure secretary Michael Kamau said there were capacity constraints to meeting Kenya’s rising energy needs.

“Ships are taking 21 days to discharge oil instead of six days. Uganda and Rwanda have been complaining about the time it takes to clear and transport goods to their countries. We have to increase capacity,” said Mr Kamau.

He added that high economic growth in East Africa and discovery of minerals demanded urgent expansion of infrastructure.

“We are hoping to break ground on the standard gauge railway by the end of this year,” said Mr Kamau.