Kenya Seals Sh8.3 Billion Energy Project Loan From France

Kenyan and French governments have sealed a Sh8.3 billion loan deal to upgrade Kenya's power transmission lines in order to eliminate blackouts in the country.

Finance Minister Robinson Githae told journalists in Nairobi that the concessional loan will enhance government's efforts to distribute electricity to the urban and rural areas.

"The financing agreement by the French government through French Development Agency (AFD) for 78.5 million euros will support the financing of the 146.7 million euro Nairobi Ring Transmission Project in order to stabilize electricity supply in the country," Githae said.

"The project is also set to be completed by July 2014 as part of plans to enhance electricity supply to Nairobi which is home to roughly 10 percent of total population and 50 percent of total demand," the minister said.

He said that AFD had already committed an additional 20 million euros of savings from the construction of the Mombasa-Nairobi transmission line.

"Other lenders are the European Investment Bank (EIB) which will provide 17.8 million euros, while Kenya Power and 100 percent government-owned Kenya Electricity Transmission Company have offered 17.8 million euros and 12.7 million euros respectively towards the construction," the finance minister said.

Githae added that government's goal is to eliminate power blackouts by 2014 that are prevalent in the country as supply struggles to meet growing demand.

The proposed 220kV Suswa substation located about 80 km northwest of Nairobi and along Mai Mahiu-Narok highway will be a critical hub that will serve as an entry and exchange point for geothermal, wind and hydro-generated power into the national grid.

Power evacuated to Suswa will reach Nairobi, Western Kenya, and can also be interconnected with Uganda through Olkaria-LessosTororo line, Tanzania through Suswa-Isinya-Arusha line and Ethiopia through the Kenya-Ethiopia line.

The contract for 220kV Suswa Grid Substation will initially be operated at 220kV until the connection from Ethiopia-Kenya Line is achieved and will contribute significantly in reinforcement of the existing Kenya National Power Grid which will require a 400/220kV substation.

According to the government the main project involves the construction of a 100 km, 400Kv Line connecting Suswa substation to Isinya substation, about 50 km southwest of Nairobi where the line will connect to the Mombasa-Nairobi line thus forming a ring around Nairobi.

French Ambassador to Kenya Etienne De Poncins said that project will put in place a long term capacity building program that will enable Kenya design and construct high voltage transmission networks in the future.

Poncins said that the new transmission lines will support economic growth in the country by promoting the expansion of generation of low-carbon energy.

"The project includes the construction of six new substations to be located in the Nairobi metropolitan region including Athi River, Ngong, Thika Road and Koma Rock in order to strengthen Kenya transmission lines," the French envoy said.

French Development Agency (AFD) Regional Director Yves Terracol said that the soft loan with an annual interest of 1.6 percent has a grace period of six years and repayment period of 20 years.

"The project will also help in the evacuation of power generated by the Olkaria geothermal power plants, Lake Turkana Wind farm and the thermal electricity plants near Mombasa," Terraccol said.

Energy Permanent Secretary Patrick Nyoike said that the electricity supply in Nairobi city is mainly through 66KV and 132 KV power grid which is unreliable.

"When the project is completed, it will provide additional electricity transfer to Nairobi and therefore provide a major link to regional grid interconnection," Nyoike said.

According to the ministry of energy, the current blackouts that the country has experienced are due to breakdown of four substations in the country.

He noted that the country's rural electricity program is also causing demand to increase.

The ministry of energy official said that in order to meet growing electricity needs the government has a number of projects in the pipeline.

"The Olkaria geothermal power plant is set to be operational by 2014, while the Lake Turkana Wind Power consisting of 300 MW should be connected to the national grid in the same year," he said.

"The Menengai 400 MW Geothermal Plant is slated to be operational by 2015," Nyoike said.

"Kenya is facing a deficit in energy production and so the government has embarked on an ambitious electricity generation plan that will see the government add 15,000 Mega watts of electricity to national grid by 2030,"

he said.

Nyoike said that construction of the Ethiopia Transmission line will begin in 2014 and will be fully operational by 2018 as all the funding is already committed.

"This will operationalize the East African power Pool which aims to make electricity a commodity in the region and will be flowing from countries of surplus to those with deficits," he said.


Capital FM

Kenyan and French governments have sealed a Sh8.3 billion loan deal to upgrade Kenya’s power sector

The soft loan has an annual interest of 1.6 percent, a grace period of six years and repayment period of 20 years.