Two Japanese banks in partnership with Eastern and Southern African Trade and Development Bank (TDB) have lent British firm Globelec $14.4 million (Sh1.86 billion) to finance the acquisition of power generation equipment for its upcoming 35 megawatts geothermal plant in Menengai, Nakuru County.
Under the co-financing plan, Japan Bank for International Cooperation (JBIC) will provide $8.64 million (Sh1.1 billion), and Mizuho Bank $5.76 million (Sh744 million) to TDB, which will on-lend the amount to Globeleq Menengai Geothermal Limited.
Japan’s state-owned insurer Nippon Export and Investment Insurance (NEXI) will be underwriting Mizuho’s portion of the loan.
Globelec broke ground on its Sh15 billion plant in June 2023, with construction starting earlier this year. The company contracted Japanese company Toyota Tsusho Corporation and its Kenyan subsidiary CFAO Kenya Limited to construct the plant. The construction of the plant is expected to conclude in mid-2025.
Fellow Japanese firm Fuji Electric Co. Ltd was handed the contract to manufacture the main machinery, including geothermal steam turbines and power generators.
“The loan is intended to provide the funds necessary…to purchase geothermal power generation equipment from Toyota Tsusho and its Kenyan subsidiary, CFAO Kenya Limited, under the credit line set up between JBIC and TDB in May 2019,” NEXI said in a statement.
“The loan is co-financed by Mizuho Bank, Ltd and JBIC, and NEXI will provide insurance for Mizuho Bank’s loan portion.”
Globelec’s plant is one of three geothermal plants earmarked for the first phase of the Menengai Power project, which targets 105MW from three independent power producers—each putting up a 35MW plant.
The other two developers awarded contracts to set up the steam power installations are Sosian Menengai Geothermal Power Limited and Orpower Twenty-Two Limited. Sosian completed its plant last year and is currently supplying power to the national grid.
The companies purchase steam from the state-owned Geothermal Development Company (GDC), which has drilled more than 50 wells in the area.
GDC is supplying steam to the power plants under a 25-year implementation and supply agreement, while Globelec also has a 25-year power purchase agreement with Kenya Power.
Globelec, which is majority-owned by British International Investment Plc (BII), took up interest in the Menengai plant after acquiring a controlling stake in Quantum Power East Africa in 2021. Quantum Power had been awarded the contract to construct the plant in 2013.
The firm also owns a 52MW solar power plant in Malindi, which began supplying energy to the grid in 2021.
