Private investors raise Kenya’s generation capacity

• 11 years ago (2013-03-16)
• David Flin

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Kenya’s electricity generation capacity will receive an increase of 80 MW when a new private power project sponsored by local investors reaches completion in the next 12 months. Gulf Power, an IPP established by a consortium of Kenyan investors, will produce power from a thermal plants being constructed near Nairobi. Gulf has signed a power purchase agreement with Kenya Power and Lighting Company (KPLC).

Agreements for the Gulf Power Project were signed between the Government of Kenya, KPLC, the World Bank, JP Morgan Chase Bank, and Gulf Power for two Partial Risk Guarantees (PRGs) for $35 million and €7 million. The PRGs are in support of two Letters of Credit provided by KPLC to Gulf Power, and to be issued by JP Morgan Chase Bank for a term of more than 15 years.

Johannes Zutt, World Bank Country Director for Kenya, said: “The World Bank has now signed partial risk guarantees for a third private power producer to increase the availability of electricity in Kenya. Diversifying Kenya’s power sources and increasing the stability of supply are key to helping businesses to grow and create jobs for the Kenyan people.”

Gulf Power is being developed by a consortium of local investors, including Gulf Energy and Noora Power. The total cost of the project is $108 million, which includes $32 million of equity investments and $76 million in long-term debt financing. The debt portion consists of IFC A loan, and commercial lending through IFC B loan and the OPEC Fund for International Development.