Kenya pleads for help to supply power

October 21, 2010
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, NAIROBI, Kenya, Oct 21- The government has requested the World Bank to come to its aid and provide payment securities to five Independent Power Producers (IPPs) so as to pave way for power generation.

Energy Permanent Secretary Patrick Nyoike said on Thursday that the power producers have been waiting to be issued with payment guarantees for more than a year, which has in turn delayed the generation of 604 Megawatts (MW) of wind and geothermal capacity.

"As KPLC\’s (Kenya Power and Lighting Company) balance sheet cannot support the required irrevocable standby letters of credit to cover debt service including recurrent fuel and non-fuel related operating costs, the government has asked for World Bank\’s assistance in providing similar support in form of Partial Risk Guarantees for the five IPP projects and others," the PS said.

The bank\’s partial risk guarantees are instruments that the institution uses to protect repayment of loan against non performance by the host country\’s side contractual obligations such as termination payments.

The PS spoke during the launch of the Sh152billlion ($1.9billion) Kenya Electricity Expansion Project (KEEP) where World Bank\’s Country Director Johannes Zutt underscored the bank\’s commitment to assist the country scale up electricity access.

And although he didn\’t indicate whether they would support the government in the IPP projects, Mr Zutt pledged that the Bank would in future be partial risk guarantors for one geothermal and two wind plants.

The Country Director further disclosed that they were considering new investment in the next financial year for further development of geothermal generation capacity in Menengai.

Already, the Bretton Woods institution has provided $330 million towards the KEEP project, which will add 280MW of capacity to the national grid and see the construction of 330 kilometers of transmission lines, 1,390 kilometers of distribution lines and 26 substations.

Pointing to the contribution of institutions such as the European Investment Bank, the African Development Bank, Japan International Cooperation Agency towards the project, Mr Zutt reinforced the importance of partnerships in co-financing the heavy project investments that are geared towards the provision of adequate, affordable and reliable energy.

Currently, only 23 percent of the country\’s population has access to electricity but the government has a vision to increase this connectivity to 50 percent by 2020.

"The provision of safe and affordable electricity supply is critical for Kenya and indeed, any country that hopes to achieve rapid and sustained growth.  No country has ever achieved 8-10 percent growth annually needed normally to reduce poverty without modern energy," he stated.

The generation of clean energy has been placed high on the government\’s agenda which has expressed its keenness to exploit the country\’s huge potential.

Besides the ongoing and planned geothermal and wind generation projects, which would help the country reduce its over reliance on hydropower, the government has indicated its intention to explore nuclear power capacity.

Towards this end, Energy Minister Kiraitu Murungi said he planned to gazette the names of the committee members who will be expected to spearhead the setting up of a nuclear power plant in the country.

"This financial year, the government has allocated Sh300 million to enable us to start developing a nuclear electricity plant and I\’m soon going to soon gazette the project committee," the minister disclosed.

Although it has acknowledged that the plant would only be operational after a few years, the government has set its sights on initially producing about 1000 Megawatts of nuclear energy.

 Mr Murungi however said that in the meantime, the government was concentrating on harnessing geothermal power whose capacity is estimated at 7000MW but only about 105MW capacity has been developed.

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