Sh11.8bn loan to offset power applicants’ cost
Kenya Power Company employees at a sub-station near Rivatex in Eldoret during a maintenance exercise on May 18, 2014. The government has secured a loan from the African Development Bank (AfDB) to subsidise new power connections. PHOTO | FILE |
What you need to know:
- Bid to increase connection fees last year revoked
- AfDB’s board of directors approved Sh11.8 billion ($133 million) credit on Wednesday. It is part of Sh71 billion ($800 million) budgeted to implement the Last Mile Connectivity Project.
The government has secured a loan from the African Development Bank (AfDB) to subsidise new power connections.
AfDB’s board of directors approved Sh11.8 billion ($133 million) credit on Wednesday. It is part of Sh71 billion ($800 million) budgeted to implement the Last Mile Connectivity Project.
The project, which is set to be launched in March, next year, involves extending low voltage lines to households close to power transformers.
“In addition to impeding economic growth, Kenyans’ low level of access to electricity is provoking environmental degradation. As a result, there is ongoing deforestation in many areas. The project will increase access to modern reliable and affordable energy supply, which will in turn encourage Kenya’s transition to green growth,” AfDB Director of Energy, Environment and Climate Change Department Alex Rugamba said.
The loan should have been approved in September. AfDB did not give any reasons why it took longer to make a decision, neither did it explain why it approved only a portion of the requested amount.
The government sought $150 million credit from AfDB, with the rest intended to come from other bilateral lenders such as the World Bank and the French Agency for Development.
AfDB said it had reached an agreement with the government that it contributes the remaining amount. It will take five years to absorb the entire budget.
The Last Mile Connectivity Project was adopted to tame rising costs of new power connections that are currently as high as Sh100,000 for single phase meter connections, commonly used in households.
UNSUSTAINABLE
A decision by Kenya Power to increase the initial cost of connection last year from Sh35,000 was reversed by the Cabinet, which approved a Sh2.7 billion loan to the utility to subsidise new connections before a long-term solution could be sought.
Kenya Power had cited rising costs of poles, transformers and cables. Treasury has since termed the subsidy “unsustainable,” forcing the government to turn to bilateral lenders to finance construction of distribution infrastructure.
