European Investment Bank Extends $66 Million Loan to Kenya for Transmission Line Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Republic of Kenya has been extended a $66 million credit line by the European Investment Bank (EIB) (Kirchberg, Luxembourg) for constructing a 450-kilometer, 400-kilovolt (kV) double-circuit electricity transmission line that will connect Mombasa and Nairobi. The project will be implemented by state-owned Kenya Electricity Transmission Company Limited (KETCL) (Nairobi, Kenya), which will also manage the EIB loan.

The project will include the construction of a 19-kilometer, 220-kV double-circuit line in the area around Nairobi and the expansion of substations. According to earlier projections and plans, the total cost of the project was estimated to be $275.34 million. EIB was to provide 27.91% of that amount. The other financers are the Asian Development Bank (ADB) (Manila, Philippines), the French Development Agency, (Paris, France) and the government of Kenya.

With the completion of the project, Kenya will successfully transfer power produced at the coast to the main load center near Nairobi. Thermal power generated at the newly commissioned Rabai power station near Mombasa will be transferred through the new line to Isinya, 60 kilometers from Nairobi. Another line will transfer power from Isinya to the Embakasi substation in Nairobi. The Rabai power plant will supply almost 84 megawatts (MW) of power to the national grid. The new line will ensure that Nairobi is supplied with sufficient electricity and more residents of the capital city are connected to the national grid. According to EIB, the government of Kenya plans to add 1 million power consumers to the national grid in a period of five years.

Kenya is the commercial hub of Eastern Africa, but the country is facing a severe power crisis because of drought conditions. After three years of continuous drought, the dams of the country are running dry, and hydropower generation has slowed down significantly. Historically, Kenya's power generation sources have been hydropower (60%), thermal power (25%), geothermal power (12%), and wind power (3%). However, the country is now being forced to increase the share of power generated from thermal sources. Implementation of Kenya's thermal power projects will require large investments in both generation and transmission.

Kenya Vision 2030 was launched in 2008 and is the government's social and financial development plan that aims to sustain an annual economic growth of 10% and raise Kenya into a mid-level economy, encourage and support an issue-based, accountable, and people-oriented political system, and nurture a just and close-knit society that will enjoy equitable social development in a secure and clean environment. Plans for the long-term vision will be finalized in periods of five years until 2030.

However, concerns have been raised about the likelihood of Kenya's meeting the targets set out in Vision 2030, given the drought conditions in the country. Besides the power situation, the drought has left millions hungry. According to Professor Richard Odingo, vice chairman of the Intergovernmental Panel on Climate Change (IPCC), the Kenyan government is largely responsible for the devastating condition, as it did not take sufficient measures to avert the negative effects of climate change.

The new transmission line from Mombasa to Nairobi is part of the investments made by the government in the energy sector to ensure that the aims of Vision 2030 are realized. Other transmission projects that are expected to help the nation meet the targets of Vision 2030 include the development of 1,500 kilometers of 132-kV lines as part of the country's rural electrification program and the development of the 1,100-kilometer interconnector line between Kenya and Ethiopia that will be used to transport electricity imported from Ethiopia. Kenya intends to initially purchase 1,000 MW of power from Ethiopia, increasing this amount to 2,000 MW by 2019.

According to Patrick Nyoike, Minister of Energy - Permanent Secretary, the country needs to invest $3.7 billion in transmission and distribution facilities by 2015 in order to be on par with investments made in the generation sector. Kenya's current peak power demand is 1,188 MW, and the government expects demand to reach 2,242 MW during the next six years. In order to meet this demand, the government estimates that a total investment of $8 billion must be made in the power generation, transmission and distribution sectors.

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