EDITORIAL: KenGen loan plan flawed

KenGen plans to borrow Sh5.7 billion from
KenGen plans to borrow Sh5.7 billion from multiple financiers. FILE PHOTO | NMG 

Power firm KenGen’s plan to procure yet another huge loan to build a solar power station in central Kenya, though fascinating in its promise to increase the amount of clean energy in our generation mix, is uninspiring.

This is because the financial and operational realities as well as the industry’s past record are not very positive. Take the planned borrowing of Sh5.7 billion from multiple financiers for this project. This is an ambition that appears to be blind to the already high levels of state-guaranteed debt that KenGen already carries.

Besides, State agencies cutting deals to procure loans that are then loaded onto the taxpayers has been the subject of intense public debate – to which the government has comprehensively responded with a ban.

Then there is the bait of cheaper, renewable power coming from the investment that is being used to justify funding from agencies such as the World Bank. Kenyan experience is that such multi-billion shilling investments have not brought relief to the consumer.

Since 2014, for instance, Kenya has added more than 300MW of clean geothermal power to the national grid for total installed capacity of more than 2300MW.

Yet consumption has only grown marginally to about 1750MW but the cost of power has kept rising hitting an all-time high. This only makes hollow the current promise that the 40MW from this solar plant will make a difference in the lives of consumers.