Kenya’s KenGen receives US$ 27 million credit facility

Alexander Richter 2 Nis 2009

Reported locally, “power generating company Kengen on Thursday received a Ksh 2.1 billion (US$ 27m) credit facility from the France Development Agency (AFD) to partly finance the extension of a third unit at the Olkaria 2 geothermal power station.

The funds will be used in the engineering, manufacturing, supply implementation and commissioning of the extension of the project whose power supply is expected to be added to the national grid by May next year.
The loan is being extended to KenGen without the guarantee of the government thus enabling direct access to donors funding to the power company without adding to the government’s external debts.

The funding comes at a time when the company is working on increasing the generation of power in the country by 500 megawatts in the next five years.

Kenya has a potential of generating over 3000 megawatts from the geyser-rich Rift Valley but only 163 megawatts of this resource has been tapped including 115 Megawatts by Kengen and 48 Megawatts by Orpower 4.

KenGen Managing Director Eddy Njoroge said the project would help greatly in harnessing the geothermal resources for power generation.

Njoroge called for more funding to enable the country exploit its geothermal power to capacity noting that it was a more potentially attractive renewable energy option.

“The attractiveness of this source is in the high potential and the low operating and maintenance costs coupled with the fact that it is a clean energy source which attracts carbon credits,” Njoroge observed.
Geothermal power is also more viable as it is not disrupted by climatic conditions like the hydroelectric power.

The signing ceremony was witnessed by among others AFD Director, Jean-Marc Gravellini and the French Ambassador Ms Elisabeth Barbier.

Gravellini noted that the country faces the challenge of increasing its power output as it must triple its generation capacity in the next 10 years for it to achieve its objectives.

Failure by the country to exploit resources like Olkaria leaves Kenya with the option of relying on imported coal and fuel at its thermal plant at the coast or else import hydroelectric power from Ethiopia.
Gravellini hailed the Olkaria II project as a milestone noting that this was the first time AFD was directly supporting the development of geothermal power in the country to boost the production capacity.
However he cautioned that the country should protect its independence from fossil fuel imports taking into account the global fight against climate change.

Ms Barbier hailed the partnership between France and Kenya in numerous fields including water and sanitation, infrastructure and environment and re-affirmed her country’s commitment to enhance the bilateral relationship for the benefit of the two countries.

She noted that that through AFD, the French government had financed projects in the East African region to the tune of about EUR 370 million (US$ 490 million) out of which 296 Euros was committed to Kenya alone for diversified development projects.

Since 1997 AFD has committed over 197 Euros to Kenya’s energy sector development.

“Beyond the common objective to fight poverty, our support is also targeted towards global issues such as climate change and building the foundation of a green dynamic Kenyan economy,” said Ms Barbier.
AFD is also implementing a 30 million Euros project in the second phase of a rural electrification project, which will see the installation of 2000 kilometres of new power lines across Western, Central, Nyanza, Rift Valley, Eastern and Coast provinces.

Geothermal energy has been produced in Kenya since 1981 when the first company was commissioned making it the first ever geothermal power producer in the continent.”

Source: Kenya Broadcasting Corp.