Private sector and World Bank tie up to spur power generation in Kenya

power  ramblaThe World Bank and four private power companies have tied up to launch an initiative that will help increase Kenya's electricity generation capacity by 285MW

Agreements for the first project, Thika Power, were signed recently between the government, Kenya Power, Citibank and the World Bank.

The project will add 87MW of capacity and the electricity it will produce will be purchased and distributed by Kenya Power.

The investment will be supported by the Kenya Private Sector Power Generation Support Project, which will provide a series of Partial Risk Guarantees (PRG) of US$166mn from the World Bank’s International Development Association (IDA).

World Bank country director for Kenya Johannes Zutt said, “The PRG is an innovative approach to leverage private sector investment to meet Kenya’s power generation needs.

“It will enable Kenya to attract private investment in the energy sector, bridging critical financing gaps from public sector funding,” added Zutt.

The bank’s PRG instrument for the four private power producers was approved by the bank’s board of executive directors on February 28, 2012, to help expand reliable power supply to domestic and industrial consumers, reducing constraints to growth and creating jobs.

These PRGs will be expected to leverage private investments of almost US$400mn in Thika Power and three other private power generation projects—Triumph Generating Company, Gulf Power, and the expansion of Or Power 4 geothermal project.

Sector manager of the World Bank’s financial solutions unit, Pankaj Gupta, said, “The PRGs will enable Kenya Power to mobilise long-term commercial financing to purchase electricity from the private independent power producers.”

Funding sources will include the African Development Bank, ABSA Capital of South Africa and the bank’s affiliate, the International Finance Corporation (IFC).

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