Kenya gets Sh41 billion to finance power supply

The World Bank board of executive directors has approved Sh41 billion ($457.5 million) funding for Kenya to increase electricity access by low income households and businesses.

The money includes Sh22.7 billion ($250 million) credit from the International Development Association (IDA), the commercial lending arm of the Word Bank Group.

It will be shared between the Ministry of Energy and Petroleum, Kenya Power and the Rural Electrification Authority, to finance infrastructure investments.

It also comprises Sh18.2 billion ($200 million) guarantee from IDA, which is meant to improve Kenya Power’s credit worth to enable it raise up to Sh45.5 billion ($500 million) in new concessional loans to replace existing commercial loans that have placed a heavy financial burden on the company.

Another Sh682.5 million ($7.5 million) from the Strategic Climate Fund, which is part of the funding, will be used to increase electricity generation from renewable energy sources.

“We are making this significant and innovative investment in Kenya’s power sector to expand electricity access to low income households and small businesses as part of the nation’s push for shared prosperity. Modern and reliable electricity will improve the quality of life of Kenyans and underpins enhanced competitiveness of the Kenyan economy,” said World Bank Country Director for Kenya Diarietou Gaye.

The global lender estimates that about 630,000 people will get access to electricity under the project that will be implemented using the funds.

The funding approval comes at a time when the government is looking for financing of up to $800 million to implement the Last Mile Connectivity Project.

The initiative seeks to accelerate the rate of access to electricity by investing in low voltage power lines to enable cheaper new connections in rural areas.