Efforts to feed low cost electricity into the national grid received a major boost Wednesday after the World Bank gave a Sh8.7 billion guarantee for the establishment of a 83 megawatt plant.
The plant, which is being developed by Triumph Power Generating Company Limited, is part of an ambitious plan by the government to reduce reliance on expensive hydro and diesel-driven thermal power sources, thereby easing expenditure on electricity for consumers.
The bank will provide the guarantee through its political risk insurance arm, the Multilateral Investment Guarantee Agency (MIGA).
The guarantee is in breach of contract cover to Industrial and Commercial Bank of China and Standard Bank of South Africa for their long-term financing to Triumph.
“We are pleased to support this investment that will help Kenya address the severe power shortages it has been facing. Additional generation provided by the project will contribute to economic growth in the country,” said MIGA vice president and chief operating officer Michel Wormser.
The heavy fuel oil plant is being developed on a build, own, and operate basis. Triumph Power will enter into a 20-year power purchase agreement with Kenya Power.
Triumph Power Generating Company is among three Independent Power Producers (IPPs) seeking to produce cheap electricity whose activity had been delayed by more than two years due to failure by the government of Kenya to provide guarantees for their investments.
Others are Gulf Power and Thika Power which are expected to set up thermal power plants running on heavy fuel oil of 87 megawatts and 80 megawatts capacities in Athi River and Thika respectively.