EIB to finance Kenya Power

12 May 2004 - The European Investment Bank (EIB) and the World Bank will inject Sh8bn ($101m) to rescue the struggling Kenya Power and Lighting Company (KPLC).

The fresh funding approved by the bank's board in Washington provides a respite to Kenyans having suffered erratic and unreliable power supplies over the last six months.

Under the new agreement, the World Bank will provide Sh5.2 billion capital that will mainly finance distribution, feasibility studies and capacity building.
The European Bank, which is expected to give Sh2.6 billion, will fund part of the Sh3 billion investment in power generation at the coast region.

The entire energy sector recovery project is estimated to cost Sh12 billion, a budget that is outside the capability of the Energy Ministry, which is charged with the programme.

Under the financing arrangements, the Government is supposed to provide Sh1.2 billion funding, leaving a finance gap of Sh2.8 billion to cover the entire project.

According to information availed to The Financial Standard, distribution system in Nairobi and coastal area will be upgraded and reinforced through construction of 66/33/11 KV lines. Sub-stations and distribution transformers will be provided under the programme as well as provision of miscellaneous facilities- metering, control and load dispatch equipment.

The project is expected to reduce non-technical losses by about 4 per cent and technical loses by one per cent. It will also result to an increase in customer connectivity by about 300 000 people.

"In addition, the quality of power supply will improve and interruption will be reduced," says sources at the bank.

A study by the bank indicates that Kenya has the highest transmission and distribution loses of 21 per cent in Sub-Saharan Africa.

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