The World Bank has approved 457.5 million U.S. dollars to scale up electricity access and help consumers enjoy better quality of electricity services in Kenya.
The bank said in a statement released in Nairobi on Wednesday that the funds will benefit more than 630,000 Kenyans from access to electricity, and electricity distributor Kenya Power will be financially stronger.
World Bank Country Director Diarietou Gaye said modern, reliable electricity will improve the quality of life of Kenyans and underpins enhanced competitiveness of the country’s economy.
“We are making this significant and innovative investment in Kenya’s power sector to expand electricity access to low-income households and small businesses as part of the nation’s push for shared prosperity,” Gaye said.
The amount includes an International Development Association (IDA) credit of 250 million dollars, an IDA guarantee of 200 million dollars and a 7.5 million dollar grant from the Strategic Climate Fund-Scaling up Renewable Energy Program.
The IDA guarantee will enhance Kenya Power’s credit quality and enable it to raise about 500 million dollars of new commercial debt with lower interest rates and longer tenors to replace existing debt that is placing a heavy burden on the company.
The IDA credit, together with the grant, will be used by the government, Kenya Power and the Rural Electrification Authority to
finance infrastructure investments and also to support technical assistance and training activities of Kenya Power, REA, the Energy Regulatory Commission and the Ministry of Energy and Petroleum.
The IDA Guarantee will allow the electricity distributor to significantly reduce its financing costs, improve liquidity and continue investing in improving the quality and coverage of its services.