General Electric in Sh8.7bn Kinangop power finance deal

A wind power project in Ngong. America’s General Electric is set to finance a similar project in Kinangop. FILE 

By GEOFFREY IRUNGU

In Summary

• General Electric (GE) has set aside cash for participation in the Kinangop power project which will be funded by both the government and private financiers.
• GE is likely to contribute a maximum of Sh3.5 billion for financing the project in line with its current policy of contributing between Sh1.7 billion and Sh3.5 billion for each venture.
• The firm expects to product some 200 megawatts or up to 20 per cent of the 1,000MW.

General Electric (GE), the US multinational conglomerate, is set to fund construction of a Sh8.7 billion ($100 million) wind power generation project in Kinangop, marking its first publicly announced financing deal in Kenya’s energy sector.

GE has already set aside cash for participation in the power project which will be funded by both the government and private financiers, the company’s Africa chief financial officer Thomas Konditi said Tuesday in an interview on the sidelines of a conference held in Nairobi to discuss the state of the East African power industry.

“We are on the verge of closure on the financing of the Kinangop power project. What we are awaiting is the financial support of the Kenya government to the project.

“It means the attorney general’s office has to sign approval of agreement of collaboration between GE and the government in the project,” said Mr Konditi.

GE is likely to contribute a maximum of Sh3.5 billion for financing the project in line with its current policy of contributing between Sh1.7 billion ($20 million) and Sh3.5 billion ($40 million) for each venture.

The exact amount it will put in the 60-megawatt Kinangop energy project will be determined once the Kenya government finalises on its own financing commitment in the project.

GE’s plan is to take up equity or shareholding of between five and 10 per cent in similar power projects in the region.

“At the starting point of these power projects, the undertaking is quite risky. You don’t really know how it will turn out. That is why we have to limit our exposure to the $20-40 million contribution,” said Mr Konditi.

The Kinangop wind power project is one of the energy projects whose output is expected to reach one gigawatt (1,000MW).

GE expects to product some 200 megawatts or up to 20 per cent of the 1,000MW.

The next project the company expects to close in terms of financing will be Kipeto in Ngong planned to cost Sh14 billion ($160 million). GE expects to take up equity of about $16 billion or 10 per cent of the total worth of the project.

“We should be able to close the Kipeto project financing by early next year. This should give Kenya another 60 megawatts in the first phase and a similar amount in the second phase,” said Mr Konditi.

In total, the company is participating in production of 180 MW or 12 per cent of the existing production of 1,500MW.

(READ: GE seeks ideas to boost Africa electricity supply)

The other participants in the various energy projects intended to generate up to 5000MW in the next four years are expected to mainly rely on debt financing.