NAIROBI, Kenya, Feb 29 – The Government of Kenya and ATIDI, the African Trade Insurance Agency, have signed the Regional Liquidity Support Facility (RLSF) agreement, where the two entities will collaborate to identify, develop, and implement renewable energy projects across Kenya.
RLSF, a joint initiative of ATIDI, the KfW Development Bank, and the Norwegian Agency for Development Cooperation (Norad), is a credit enhancement instrument provided by ATIDI to renewable energy Independent Power Producers (IPPs) that sell the electricity generated by their projects to state-owned power utilities.
The instrument’s scope has recently been extended to provide support for eligible transmission projects, allowing for possible private sector participation in this key sub-sector.
“Our support for new projects in Kenya via RLSF will build on our historical involvement in the country’s energy sector, having supported projects such as the Lake Turkana and Kipeto wind projects in the past,” Manuel Moses, CEO, ATIDI, said.
ATIDI will issue liquidity instruments, or ‘RLSF policies’, backed by cash collateral from KfW and Norad, to IPPs or private transmission companies for a maximum tenor of up to 15 years.
Each RLSF policy will cover up to a maximum of 12 months’ worth of revenue for the project.
The RLSF cover is available for renewable energy projects of up to 100 MW (larger projects can be considered on a case-by-case basis) and private-financed transmission projects.
With the RLSF MoU now in place, ATIDI will engage with IPPs in Kenya with the expectation that advanced hydro, geothermal, solar, and wind projects may benefit from this instrument soon.
The projects will not only focus on leveraging the country’s abundant natural resources to generate clean and sustainable energy but will also reinforce its power generation and transmission capacity.
Statistics show that over 80 percent of Kenya’s electricity is generated from renewable energy sources.
This places the country of over 50 million people well on its way to meeting its goal of transitioning to 100 percent clean energy by 2030.
Parties to the MoU include the National Treasury, the Ministry of Energy & Petroleum, Geothermal Development Company (GDC), Kenya Electricity Transmission Company Limited (KETRACO), and Kenya Power and Lighting Company (KPLC).
The RLSF MoU supplements the membership agreements already in place between ATIDI and the Government of Kenya.
Kenya becomes the tenth ATIDI member state to sign the RLSF MoU after Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda, and Zambia, with the expectation that more of ATIDI’s member states will sign up.
To date, RLSF policies have been issued in support of six (6) renewable energy projects in Burundi, Malawi, and Uganda, enabling total financing of $207.5 million and a total installed electricity generation capacity of 136.3 MW.
“With this MoU with ATIDI, a multilateral institution that we are proud to not only be a founding member of but to host with its headquarters in Nairobi, the provision of RLSF policies will hopefully enable more projects to advance whilst reducing the need for government-backed credit enhancement tools,” Njuguna Ndung’u, Cabinet Secretary, National Treasury stated.
