The World Bank has approved a $180 million International Development Association (IDA) Guarantee to mobilize private sector financing to strengthen the financial position of Kenya Electricity Generation Company Limited (KenGen) and build energy security for all Kenyans.
The project is expected to build on Kenya’s gains that have diversified the energy mix and significantly improved electrification bringing much needed energy to millions of households and businesses. Ultimately, these gains lower the cost of electricity – critical to power Kenya’s manufacturing and growth aspirations.
The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa.
According to World Bank Country Director for Kenya, Diarietou Gaye affordable and accessible electricity is essential to ensuring that Kenyan businesses remain competitive in the international market, allows women and youth to run their businesses safely late into the night within informal settlements and strengthens citizen contribution into growing Kenya’s economy.
“This is what Kenya needs if it is to achieve a middle-income economy status by 2030.” She said.
KenGen currently manages 70% of Kenya’s generation capacity of 1,631 megawatts making it one of the largest in East Africa. The project supports KenGen in raising up to $300 million in long-term commercial financing to be used to refinance an expensive portion of KenGen’s existing commercial loans, enhancing KenGen’s credit quality and promoting sustainable development of renewable energy in Kenya.
“This IDA Guarantee will solidify KenGen’s financial position as the company pursues its aspirations towards geothermal development, building energy security for all Kenyans, and becoming a sustainable energy hallmark in Africa,” said Mariano Salto, World Bank Energy Economist and Task Team Leader.
The KenGen Guarantee Project is an addition to the application of the World Bank Group’s Maximizing Finance for Development approach within Kenya’s energy sector in the past 20 years.
Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.