Kenya Electricity Generating Company (KenGen) will rely heavily on concessional loans to raise $4.3 billion (Sh555.6 billion at current exchange rates) to finance projects to generate an additional 1,500 megawatts of power.
Managing director Peter Njenga says the firm is keen to raise cheap money to fund the 23 projects spread across geothermal, wind, hydro, and solar power generation.
The period in which KenGen targets to raise the money remains undisclosed, but some of the projects are set to start in the coming months.
The company is keen to cement its dominance in supplying the national electricity grid from its current share of 64 percent. This includes setting up wind and solar plants, besides expanding the current capacity from geothermal and hydro.
“Of course, $4.3 billion is a lot of money, and we are going through our traditional ways of concessional loans, and we will work with the government to help us secure the loans,” said Mr Njenga.
Unlike commercial loans, concessional funds offer below-market interest rates and grace periods in which the loan recipient is not required to make debt payments, highlighting why KenGen is keen on this form of credit.
“Even as we borrow, we will also need to put in our equity as KenGen, we have about 23 projects to contribute to the 1,500 megawatts,” said Mr Njenga.
KenGen, for example, is set to build a 42.5-megawatt floating solar power plant at the Seven Forks scheme, where the company generates most of its hydroelectricity.
The power producer is also in advanced talks to secure land in Marsabit and set up a maiden wind power plant whose initial capacity will be 2,000 megawatts.
KenGen is currently rehabilitating its oldest geothermal plant, Olkaria One which will increase its capacity by 18 megawatts to 63 megawatts. The project is set to be completed in December 2026.
Geothermal is the mainstay of KenGen’s power, with the firm having supplied 5,090 gigawatt hours (GWh) of electricity to Kenya Power in the year that ended June 2023. Hydro followed with 2,520 GWh, while supplies from its wind plants came in third at 57 GWh.
KenGen is betting on the aggressive push to lower the cost of electricity in Kenya as an opportunity to grow its supplies to Kenya Power.
Besides lowering power bills on homes and businesses, Kenya is also keen to green the national grid as part of curbing the environmental pollution caused by the use of the dirty and expensive thermal plants.
Hydroelectricity is the cheapest source with a unit priced at Sh3.83 as at February this year, followed by a unit of geothermal power at Sh10.28 while a unit of imported hydro-electricity at Sh10.69 a unit as at February this year.
