The funds, under the Kenya Electricity Expansion Project (KEEP), will go towards the implementation of various electricity generation plants, construction of transmission and distribution facilities, and fund the expansion of electricity access in urban, peri-urban and rural areas.
The funds will also provide partial risk guarantees to independent power producers (IPPs), to encourage private investment in the sector because the Kenya Power and Lighting Company (KPLC) cannot afford to issue irrevocable letters of credit.
"We have continued to face the imbalances between demand and supply brought about by gross underinvestment in new generation capacity in tandem with socio-economic transformation and growth," said Energy Minister, Kiraitu Murungi, during the launch of KEEP.
He cited Kenya’s ambitious Vision 2030 economic blueprint, saying it is critical to expand and diversify electricity infrastructures to guarantee access to clean, reliable and affordable power, with the overall objective of ensuring 50 per cent of the population has access by 2020.
Currently, only 23 per cent of Kenyans have access to electricity, a significant growth given that in 2002, only six per cent had access.
KEEP, a successor of the Energy Sector Recovery Project, is a collaboration between the Government, electricity parastatals, and development partners, including the World Bank, Exim Bank of China, and the governments of Belgium and Spain.
Other partners include European Investment Bank, Africa Development Bank, France Development Agency, Japan International Co-operation Agency, and Germany Development Agency.
Some of the projects expected to benefit from KEEP include five-generation plants being implement by IPPs, with a capacity of more than 600 MW. These include the 300 MW Lake Turkana Wind Power plant, the 52 MW Olkaria III geothermal power station extension, and three medium term speed diesel plants, with a combined capacity of 252 MW.
"Implementation of these projects have delayed for a year because developers have been awaiting issuance of payment security, which KPLC’s balance sheet cannot support," said Energy PS, Patrick Nyoike.
Other generation plants that would be financed through KEEP include the 280 MW expansion of Olkaria I and IV geothermal power plants, and various plants being implemented by KenGen, with a combined capacity of 883 MW.
Other projects earmarked include construction of high capacity transmission lines across major towns, and drilling of geothermal wells.
According to World Bank Country Director Johannes Zutt, implementation of these projects is critical to Kenya’s future, as the country targets to achieve an economic growth rate of 10 per cent annually and ultimately escape poverty.
By John Njiraini, www.standardmedia.co.ke