Kenya receives $330m World Bank loan to exploit geothermal resources

3 June 2010 – Kenya’s efforts to develop its vast geothermal resources will get a major boost from a $330m concessional loan from the World Bank.
The financing will also support projects to expand electrification across the country, where only about 14 per cent of the population have access.
Expensive, scarce and unreliable electricity are major barriers to economic recovery and growth in Kenya, as in much of Sub-Saharan Africa.  In 2007, businesses in Kenya lost 6.4 per cent of their sales due to electrical outages, according to the World Bank.
With the majority of the country’s power generated by hydroelectric dams, failing rains last year again battered the country with blackouts.
Of the $330m total, $160m will go toward an ongoing Energy Sector Recovery Project, including increased geothermal generation, as well as improvements to electricity distribution.  Kenya is encouraging private development of its geothermal resources – estimated at some 7 GW – through publicly financed exploration.
A new parastatal, the Geothermal Development Company, which began drilling earlier this year, has so far completed four wells and is prospecting at sites up and down the Great Rift Valley.
It purchased two drilling rigs from the China Petroleum Technology and Development Corporation. Earlier this spring, China offered concessional financing for geothermal development in Kenya, as did Japan.
The World Bank International Development Association credits have no interest charge, but do carry a 0.75 per cent service charge.
This credit for Kenya has a 40 year term and 10 year grace period. Other development financing institutions participating in the project include the European Investment Bank, Germany’s KfW, Japan International Cooperation Agency and Agence Française de Développement. The government is also contributing financing.