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Japan extends Sh40b to Kenya for geothermal power project

By Standard Reporter | March 10th 2016

NAIROBI, KENYA: The Government of Japan and the Japan International Cooperation Agency (JICA) on Wednesday signed a Loan Agreement respectively with Kenya for the Official Development Assistance Loan for Olkaria V Geothermal Development Project.

National Treasury Cabinet Secretary Henry Rotich signed on behalf of the Government of Kenya while Japanese Ambassador to Kenya, Tatsushi Terada and JICA Chief Representative Ms. Keiko Sano signed on behalf of the Government and the people of Japan.

The ODA Loan was pledged by the Government of Japan to President Uhuru Kenyatta in August 2015, in the amount of 45.690 billion Japanese Yen* (approx. 40 billion Kenyan shillings) with the aim to enhance the volume and security of power supply in Kenya by constructing a 140 MW geothermal power plant, thereby creating a conducive investment climate and enabling sustainable economic growth in Kenya.

The amount is the largest amount of JICA ODA loan for past 5 decades of Japan’s assistance towards Kenya.

Speaking shortly after the signing ceremony, Ambassador Terada expressed confidence in Kenya’s efforts towards creating a conducive environment for investment and development.

“This is so far the biggest amount extended to a project in Kenya by the Government of Japan, and therefore demonstrates our growing confidence and friendship with Kenya,” he said.

Mr. Rotich praised Japan’s commitment to Kenya’s development agenda, adding that the East African nation had received on a cumulative basis financial support amounting Sh472.7 billion from the Japanese government, making it one of our major bilateral partners.

“Once complete,” he said, “these projects will contribute to the realization of the Vision 2030 which aims at transforming Kenya into a middle income country.”

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JICA Chief Representative Ms. Keiko Sano said Japan has intensified efforts to support Kenya’s energy sector.

“Kenya has a huge potential of geothermal resources estimated at 10,000 MW,” she said.

The concessional loan will be provided by JICA, at an annual interest rate of 0.2 percent, with an amortization period of 30 years including a grace period of 10 years.

Kenya Electricity Generating Company (KenGen) will be the executing agency for the project, which is scheduled to complete and connect to the national grid in 2019. The project will add another 2 units of a total of 140MW to the already existing geothermal power plants in Olkaria, which have an installed capacity of over 500MW, almost 25 percent of the total installed capacity in Kenya.

Today, Kenya’s electricity generation capacity stands at approximately 2,200 MW. Some 296 MW of this installed capacity has been financed by Japan through concessional ODA Loans to KenGen, namely, Kipevu I Diesel Power Plant (75 MW), Sondu Miriu Hydropower Plant (60MW), Sangoro Power Plant (21MW), and Olkaria I Units 4/5 Power Plant (140 MW).

In addition to power generation, Japan supports Kenya’s energy sector comprehensively by financing the Olkaria-Lessos-Kisumu Transmission Lines (KETRACO), and providing technical assistance to GDC, JKUAT-Institute of Energy and Environment Technology, and REA, in order to enhance Kenya’s capacity in geothermal development and other renewable energies. Japan is committed to continue providing optimal solutions to Kenya’s development of clean and efficient energy

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