Thika Power will sell all output to national distributor Kenya Power, increasing the supply of reliable electricity in the country.
The power plant that produces 87 Megawatts will use heavy fuel oil (HFO), which will help diversify Kenya’s electricity away from hydropower.
During times of drought, when hydropower drops in supply, Kenya has had to turn to costly emergency power.
HFO plants are a quicker and viable option to address the energy deficit in Kenya, given the relatively long development period of other sources like geothermal energy and coal.
The Thika project is a result of the Kenyan government’s tender of three power plants in 2009, to encourage private sector participation in electricity supply.
“With the massive growth in energy demand in Africa; Independent Power Projects can add reliable and sustainable capacity to the power network,” said Samer Nasr, Managing Director of Melec PowerGen Inc.
“To successfully implement an IPP, you need a partner with extensive knowledge and experience, as well as a country that enjoys stability and has the required structures. We believe both Kenya Power and Kenya have all of these, and are leading the way in the development of electrical infrastructure in sub-Saharan Africa,” he added.
The Sh12 billion Thika Power plant is a subsidiary of Lebanese firm Melec PowerGen.
Jean Philippe Prosper, IFC Director for East and Southern Africa said: “Thika and the recent series of independent power projects in Kenya demonstrate how the private sector can help the government meet growing demand for electricity. The choice of heavy fuel oils will further diversify Kenya’s energy sources, making power generation more stable.”
Alongside IFC, African Development Bank and Absa Capital will contribute Sh2.9 billion to the project.
The World Bank estimates that power shortages currently cost the Kenyan economy two percent of GDP growth.
IFC plans to invest Sh86 billion in infrastructure projects in Africa in fiscal year 2012, up from Sh17.2 billion five years ago.