Sh13 billion to power steam energy search

What you need to know:

  • “This source of energy has, however, become unreliable due to climate change leading to erratic patterns of rainfall,” National Treasury Cabinet Secretary Henry Rotich said.

Germany’s development bank has extended to Kenya Sh13.5 billion in loans and grants towards investments in water distribution and geothermal development.

The National Treasury and officials from the bank, KfW, Thursday signed a loan agreement worth Sh9.6 billion (euro 80 million), which will finance the drilling of 20  exploration and appraisal geothermal wells in phase one of the Bogoria-Silali project.

This will feed into the government’s efforts to diversify energy sources beyond hydro-power. According to the Geothermal Development Company (GDC), the government hopes to develop 200MW from the Bogoria-Silali block by the end of 2016.

“The government is committed to the diversification of energy sources, which has hitherto been driven mainly by hydropower.

“This source of energy has, however, become unreliable due to climate change leading to erratic patterns of rainfall,” National Treasury Cabinet Secretary Henry Rotich said.

Has a grace period
An interest rate of 1.75 per cent will be attached to the loan, which has a grace period of five years and a repayment period of 10 years.

Private investors are expected to partner with the GDC on this and other geothermal development projects by setting up plants to convert the steam resource to energy.

Two weeks ago, KfW signed a Sh3 billion (euro 25 million) agreement with Kenya to finance water and sanitation projects in Nairobi metropolitan area.

The credit has been extended at an interest rate of 3.25 per cent. A further Sh1 billion ($8.5 million) in grants will go towards the project that will cover at least 45,000 households and connect 40,000 slum dwellers to clean water.