The World Bank's private lending arm has cut its dealings with a Kenyan firm that wanted to set up a multi-billion-shilling cooking gas plant in Mombasa. The International Finance Corporation (IFC) cancelled funding to Mombasa Gas Terminal Ltd (MGT), dealing a blow to the project that was expected to help bring down the cost of the crucial commodity.
The firm planned to construct a liquefied petroleum gas (LPG) import terminal in the port of Mombasa at a cost of Sh14.5 billion.
MGT said earlier that it planned to build the gas hub with the backing of Dubai-based Milio International - a prominent international petroleum logistics, marketing, trading, exploration and production company.
The cancellation is a rarity for the IFC - a sister organisation of the World Bank tasked with private-sector financing in developing countries.
It leaves the future of the project in limbo but also leaves many questions unanswered. For instance, what did the IFC establish along the way to make a surprise U-turn in supporting the project?
The move to cancel the crucial funding has baffled many Kenyans at a time such projects have become critical and the World Bank is a crucial bilateral partner for Kenya. In recent years, the World Bank through IFC has invested billions of shillings in Kenyan companies, cementing its role as one of the most prominent foreign institutional investors in the local market. IFC has invested in about 125 local firms so far, acquiring significant stakes in some companies in the form of long-term loans.
At a meeting with Mr Makhtar Diop, the Managing Director of IFC, at State Nairobi, last year, President William Ruto, the IFC boss committed to partnering with Kenya to strengthen the role of the private sector in national transformation. It behooves the IFC and the project's backers to come clear on why the project fell through. Clear answers will form a good lesson for other Kenyan firms and the government when seeking crucial financial support from lenders like the IFC.
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