IFC Invests in Kenya Power to Electrify Half a Million Homes
Washington/Nairobi, July 8, 2012–IFC, a member of the World Bank Group, is providing a $50 million loan to Kenya Power Lighting Company (Kenya Power) to help the national power distributor expand its network to reach over half a million new households by 2014 while reducing losses and increasing the supply of reliable electricity.
Kenya Power’s expansion responds to greater demand for electricity as Kenya’s economy eyes middle-income status. The Kenyan government announced a target of 40% household access to power by 2020, while reducing the gap between urban and rural areas. During the past three years, the company has been injecting capital to continue extending the power grid as it accelerates its connectivity rate. Kenya Power connected over 300,000 new customers in the last financial year alone.
“IFC’s decision to loan $50 million demonstrates the confidence that the World Bank and its sister institutions have in corporate administration at Kenya Power and the viability of its business,” said Joseph Njoroge, Managing Director and CEO of Kenya Power. “The funds will fill a financing gap as Kenya Power endeavors to transform the distribution network to improve quality, stability and reliability of power supply to a fast growing economy.”
The $50 million is the beginning of long-term cooperation between IFC and Kenya Power, possibly followed by further tranches to help the company implement 42 power projects in Nairobi and its environs.
“Power projects are by nature capital intensive, and the IFC loan therefore brings in much needed financial support in efforts to extend the national grid, improve quality of power supply and stabilize voltages to cope with additional demand, Njoroge added.
The expansion will also bear fruit for Kenya’s climate change agenda. Alongside the investment, IFC’s resource efficiency team will provide advisory services to Kenya Power on how to reduce power losses. Even a 1 percent drop in power loss leads to massive energy savings, cutting Kenya’s greenhouse gas emissions by 55,000 tons per year. IFC and Kenya Power are working together to develop measures that will enable the company to save energy through more efficient energy use.
“More stable power supply will allow business growth and improve living standards in Kenya,” said Jean Philippe Prosper, IFC Director for East and Southern Africa. “The IFC loan builds on a long-term partnership between the World Bank and Kenya Power over the past 10 years. IFC seeks to invest in companies such as Kenya Power, which will further develop the power sector in Kenya and the region; reduce damage to the environment and fuel economic growth and development of the East Africa power pool.”
Increasing access to power is at the heart of IFC’s strategy for infrastructure development in sub-Saharan Africa. IFC invested $1 billion in infrastructure projects in Africa in fiscal year 2012, up from $200 million five years ago.