Kenya attracts US financing deals for power

Virginia Rometty, the IBM president and CEO, speaks during panel discussions on Power Africa Initiative, which was part of the US-Africa Leaders Summit in Washington DC on August 5, 2014. AFP PHOTO | JEWEL SAMAD 

By KIARIE NJOROGE

In Summary

• World Bank has announced it will provide $5 billion (Sh435 billion) across six African countries for the five-year initiative.
• Citi Bank has also pledged to source for $2.5 billion in capital while South Africa-based Standard Bank Group will arrange for $400 million in the near term.
• Under the Power Africa Initiative, the US is projecting 20 million families and businesses in the continent will be connected to affordable electricity by 2018.

Multiple lending institutions have made commitments to the US-led $7 billion (Sh609 billion) Power Africa Initiative which will provide financing for additional power, connecting millions of Kenyans to the national grid.

 

So far Kenya expects to add over 600 megawatts of clean power to the national grid by 2018 through the United States government support to projects that have commenced.

Under the Power Africa Initiative, the US is projecting 20 million families and businesses in the continent will be connected to affordable electricity by 2018.

World Bank has announced it will provide $5 billion (Sh435 billion) across six African countries for the five-year initiative announced by US President Barack Obama in 2013.

Citi Bank has also pledged to source for $2.5 billion in capital while South Africa-based Standard Bank Group will arrange for $400 million in the near term.

“In 2013 we committed to arrange funding of at least $150m of debt in the near term across the Power Africa countries, while more recently that amount has risen to over $400m, principally in Kenya and Nigeria, with smaller transactions in Ghana and Tanzania,” said Mr Sim Tshabalala, chief executive of Standard Bank Group.

The commitments were made during the US-Africa Summit that is being hosted by President Obama in Washington, DC.

Multiple power projects backed by US finance and companies have since started in the country most notably in the wind and geothermal fields.

Among them is the 300 megawatt Lake Turkana Wind Power (LTWP) project, which is slated to come on-stream in 2017.

The US is channelling Sh21.75 billion through the Overseas Private Investment Corporation (OPIC) for the project. The corporation has also provided Sh17 billion for the Kipeto Wind Farm in Kajiado County, which is being implemented by US conglomerate General Electric, a major supplier of wind power turbines.

READ: Wind power venture gets Sh22bn boost

OPIC will commit up to $1.5 billion (Sh131 billion) in financing and insurance to energy projects in Kenya, Ethiopia, Ghana, Liberia, Nigeria, and Tanzania; the initial six partner countries that the US will assist to inject 10,000 megawatts to the national grids.

General Electric is also developing a 61-megawatt wind farm in Kinangop with power from the Sh12.7 billion project set to come on-stream in mid 2015. Standard Bank Group is the lead financial arranger for the project.

Another project is the development of the 100 megawatt Olkaria III geothermal power complex in Naivasha. The Sh18.5 billion project by US firm Orpower 4 is also financed by OPIC.

READ: Olkaria III geothermal raises capacity to 110MW
In January, Baringo-based Cummins Cogeneration secured a power purchase agreement with Kenya Power, setting the stage for production of 12 megawatts from the Prosopis juliflora plant (known locally as Mathenge).