NAIROBI, Kenya, Oct 23 – Private sector energy developers have received a shot in the arm with the establishment of a fund to finance projects in the country.
The African Enterprise Challenge Fund (AECF) has launched the Renewable Energy and Adaptation to Climate Technologies (REACT) special funding window that will see innovative private sector players receive up to Sh120 million interest free loans and grants to fund energy projects.
AECF Director Hugh Scott said on Friday that successful ideas would have to demonstrate a positive impact on the rural poor, deliver increased employment, improved productivity and cut energy costs.
“The financial sector is so crucial in the development of rural areas and we want to incentivise the private sector to put in place new mechanisms for financing these initiatives,” Mr Scott said.
Mr Scott said applicants would be expected to match the loan application to qualify.
“In reality we expect the average project size from our side to be between $700,000 (Sh56 million) and $750,000 (Sh60.5 million) matched by the private sector at least one to one although we would like it to be three to one,” Mr Scott said.
The competition will only be open to profit making companies that include both African and international companies but the proposed projects must take place in one or more east African countries.
The competition, which will be rolled out early next month, is funded by the UK aid through the Department for International Development (DFID) to a tune of Sh800 million.
Speaking during the launch, Prime Minister Raila Odinga asked those interested in the energy sector to liaise with the Task Force on Green Energy at his office to facilitate the formalities involved in the establishment of related plants.
“We want to boost our green energy production from the current 1200 Mega Watts to 3,000 MW by the year 2013” the Premier said.
He said the launch of the exercise could help in reversing the vulnerability of the region to the ravages of global warming as many consumers shift to energy sources with less carbon emission when the proposed power plants are in place.
The competition kitty which draws supports from International Fund For Agriculture ( IFAD) , Netherlands Ministry of Foreign affairs (NMFA) among other reputable organizations funds programs in Agribusiness.
The programs also consider entrepreneurs offering financial Services in rural areas and those involved in renewable energy and technologies that help small scale farmers adapt to climate change.