By James Anyanzwa and John Muchira
Kenya Power has procured Sh4.25 billion ($50 million) long-term loan from the International Finance Corporation ( IFC) to finance expansion of its distribution network to over 500,000 new households by 2014.
The amount constitutes the first tranche of the $200 million (Sh17 billion) loan.
This comes barely two-years after the state-owned power distributor executed a massive restructuring of its balance sheet, with intentions of attracting cheap funding for its growth and expansion programmes.
Kenya Power Managing Director and Chief Executive Joseph Njoroge said the loan by World Bank’s commercial lending arm ( IFC), would be repaid within 12 years at an interest rate of less than five per cent.
Njoroge explained that the money would be spent on the implementation of 42 power distribution projects in Nairobi and its environs.
“The proceeds of this loan will be used to finance several power projects in and around Nairobi where there is compelling and urgent need for electricity network improvement,” Njoroge told a media briefing in Nairobi on Wednesday. He noted that implementation of these projects would be completed in 2014, adding that electricity consumers would benefit through reduced power outages, while Kenya Power’s transmission losses would be minimized.
“It is noteworthy that in the past Kenya Power has only received on-lent funding from bilateral and multilateral agencies and so, this is the first time Kenya Power, which is partly private entity is signing a loan directly from a World Bank institution,” he said.
“Increasing access to power is an issue that is very close to the heart of IFC for infrastructural development in sub-Saharan Africa. More stable power supply will allow business growth and improve living standards in Kenya,” said Jean Philippe Prosper, IFC Director for East and Southern Africa.
The Government announced to target 40 per cent household to have access to power by 2020, while reducing the electricity gap between urban and rural areas. Njoroge noted that Kenya Power is also undertaking other projects geared towards improving electricity services.