European Investment Bank and French Development Agency have jointly given KenGen Sh29.4 billion as concessionary loan to expand Olkaria geothermal power plant to generate additional 280 megawatts.
Under the agreement signed yesterday at Treasury, French Development Agency (AFD) will give KenGen Sh16.2 billion to partly finance the construction of 140-megawatt Olkaria IV power plant to be located at Olkaria.
Further, European Investment Bank will give KenGen Sh12.8 billion to finance construction of a plant and a high voltage substation and transmission lines from the two new power stations — Olkaria IV and Olkaria I unit four and five.
The project is expected to be operational by July 2013. Energy Permanent Secretary Patrick Nyoike said the government had lined up several energy generating projects expected to be ready by 2013.
They will increase the country’s generating capacity from 1,300MW currently to 2,259 MW, the PS said during the signing of the loan agreements at the Treasury, Nairobi.
Finance minister Uhuru Kenyatta said energy consumption has been increasing over the years, forcing the government scale up investment in power generation to keep pace with demand.
He said the government seeks to reduce over-reliance on hydropower because it is susceptible to drought and was exploring wind, solar and geothermal.
Mr Kenyatta said only 20 per cent of households have access to grid electricity, making electricity the most sought after energy source.
Wood fuel and other biomass sources account for over 60 per cent.
“We need to reverse this trend and increase access of the households to the national grid electricity to improve the quality of life of our people,” he said. “This will ensure that the use of firewood that destroys our forests will be drastically be reduced.”
French Ambassador to Kenya Etienne de Poncins said there are immense benefits in the development of geothermal because it is a clean, renewable and reliable source of power.
Geothermal power is stable, unaffected by weather, and emits no carbon dioxide as generation uses geothermal fluid, a mixture of high-temperature water and steam extracted from deep underground reservoirs through production wells.