World Bank on Monday approved Sh18 billion ($180 million) International Development Association (IDA) Guarantee to mobilize private sector financing to strengthen the financial position of Kenya Electricity Generation Company Limited (KenGen) and build energy security for all Kenyans.
The project will build on Kenya’s gains that have diversified the energy mix and significantly improved electrification bringing much needed energy to millions of households and businesses. Ultimately, these gains lower the cost of electricity – critical to power Kenya’s manufacturing and growth aspirations.
“Affordable and accessible electricity is essential to ensuring that Kenyan businesses remain competitive in the international market, allows women and youth to run their businesses safely late into the night within informal settlements and strengthens citizen contribution into growing Kenya’s economy,” said Diarietou Gaye, World Bank Country Director for Kenya.
She added that this is what Kenya needs if it is to achieve a middle-income economy status by 2030.
KenGen currently manages 70 per cent of Kenya’s generation capacity of 1,631 megawatts making it one of the largest in East Africa. The project supports KenGen in raising up to Sh30 billion ($300 million) in long-term commercial financing to be used to refinance an expensive portion of KenGen’s existing commercial loans, enhancing KenGen’s credit quality and promoting sustainable development of renewable energy in Kenya.
“This IDA Guarantee will solidify KenGen’s financial position as the company pursues its aspirations towards geothermal development, building energy security for all Kenyans, and becoming a sustainable energy hallmark in Africa,” said Mariano Salto, World Bank Energy Economist and Task Team Leader.
The KenGen Guarantee Project is an addition to the application of the World Bank Group’s Maximizing Finance for Development (MFD)approach within Kenya’s energy sector in the past 20 years.